Dubai-based investment firm Badoer Investments Ltd has pumped in Sh100 million ($1 million) into Sumac Microfinance Bank, taking up 15.6 per cent stake in the SME lender.
The deal, which values Sumac at Sh641 million, will see the company’s founder Ricardo Badoer take up a seat on the board of Sumac.
Sumac says it will use the funds to boost its capital as it looks to expand its loan book.
“The money is for working capital, to be lent mostly to SMEs and we are also thinking of expansion to add to our four branches, start Internet banking and join the clearinghouse.
“We are looking to open a new branch every year, each with its own marketing unit,” Sumac chief executive John Njihia told the Business Daily.
Sumac currently has two branches in Nairobi, one in Githunguri in Kiambu and another in Nakuru. It is looking to expand to Eldoret, Kisumu and Meru targeting agribusinesses. The firm has a clientele base of 10,000 and loan book of Sh1 billion.
Mr Badoer said his firm had chosen to invest in the lender due to its ability to reach borrowers who would not normally access bank loans.
He added that the amount is an initial investment and that he would inject more money into Sumac down the road.
“Being a microfinance bank they are able to reach people like farmers, who are not normally able to get access to banking. We are hoping to bring our expertise from other fields of banking to help grow that,” said Mr Badoer.
Over the past three years, it has mobilized about Sh600 million from different investors.
This includes Sh330 million in debt financing received earlier this year from Mexican fund manager Triple Jump (Sh153 million), Sh102 million from the Regional MSME Investment Fund for sub-Saharan Africa, Sh45 million from the Development Bank of Kenya and Sh30 million from the Micro Enterprises Support Programme Trust.
Sumac, which began as an investment club in 2002, received a Central Bank of Kenya deposit-taking license in 2012.
At the end of 2016, it was ranked fifth in the microfinance banking sector with a market share of 1.3 per cent. Most recently, Sumac Microfinance Bank was Awarded the Second Fastest Growing Microfinance Bank in the Think Business Banking Awards 2018. This is a clear and sure sign of the bank’s rapid growth to the top.