Equity Group Seeking Ksh 50 Billion Loan To Business Boost

Equity Group

During the week, Equity Group disclosed it was seeking to raise up to 50.0 billion shillings in long term debt from international financiers in the next three years as it seeks to boost its liquidity and capital positions.

This is reflective of the trend by local banks, which are increasingly seeking loans from global financiers such as the International Finance Corporation (IFC) and European Investment Bank, which offer relatively favorable terms of debt including lower interest rates and longer maturities.

As highlighted in the Cytonn Weekly #28/2020, mortgage financier HF Group is also seeking to raise 1.0 billion shillings additional tiers II capital from global financiers.

In the Q1’2020 Equity group’s borrowing stood at 52.6 billion shillings, with the Kenyan subsidiary receiving an additional 5.3 billion shillings from the International Finance Corporation (IFC) to be used for onward lending to Small and Medium Enterprises (SMEs) impacted by the pandemic.

The group anticipates the impact of the pandemic to last for at least 18 months and with 22.9 billion shillings (43.5 percent) of the 52.6 billion shillings of long- term borrowing expected to mature in March 2023.

“It is our view that the additional liquidity injection will boost the group’s liquidity and capital position in both the short and long term as it tries to mitigate effects of the pandemic,” said Cytonn Investments.

The lender has already taken a proactive strategy in preserving its capital and liquidity to enable it to respond appropriately to the ongoing pandemic through suspending its FY’2019 dividend payment, as well as abandoning its regional expansion deal with Atlas Mara.