The Danish private equity firm Investment Fund for Developing Countries (IFU) has acquired a 20% stake in Sidian Bank through a Sh1.2 billion capital injection, marking its first financial institution investment in Kenya. The deal, finalized in March 2019 after nine months of negotiations, involves converting a loan into equity over three years, potentially making IFU the bank’s second-largest shareholder after Centum Investment Company.
The investment aims to strengthen Sidian Bank’s regulatory capital ratios and expand lending to small and medium enterprises. IFU will gain two board seats, increasing the director count to seven, with one member and one observer requiring approval from the Central Bank of Kenya. Current major shareholders, including K-Rep Group Limited, will see their stakes diluted as the bank seeks to achieve tier II banking status by 2022.
Sidian Bank reported a Sh164.92 million loss by September 2018, falling short of capital adequacy requirements by 0.5 percentage points. The Danish fund, which has operated in Kenya since 1970, also holds stakes in renewable energy and infrastructure projects like the Lake Turkana Wind Power initiative. IFU’s total African investments amount to Sh5.4 billion, with a focus on development impact and financial returns.
IFU Vice-President Morten Elkjaer emphasized the strategic shift toward SME-centric investments, stating the deal aligns with the fund’s goal to deepen its presence in Kenya’s financial sector. Sidian Bank CEO Chege Thumbi confirmed the board changes and regulatory filings, highlighting improved governance as a priority.
K-Rep Group Limited held a 17.05% stake as of the December 2017 annual report, according to the source. The bank’s total assets stood at Sh25 billion as of September 2018, with IFU’s investment expected to firm up its capital position.
