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Kenyan Tea Producer Agrees to Buy 15% Stake in Family Bank

Dec. 18 (Bloomberg) -- Kenya Tea Development Agency Ltd., the country’s largest grower of the leaves, agreed to buy 15 percent of Family Bank Ltd. for an undisclosed sum, said Peter Munyiri, managing director of the Kenyan lender.

Lap Trust, a pension fund for municipal workers, will take a 7.3 percent stake in the Nairobi-based bank, Munyiri told reporters today in the capital, Nairobi. The two entities will become “anchor shareholders,” he said.

KTDA’s investment marks an attempt to diversify its investments, Chairman Peter Kanyago said at the briefing. “We have decided to not only rely on tea farms,” he said.

The agency represents 565,000 small-scale tea growers in Kenya, the world’s largest exporter of the black variety of the leaves. The closely held company accounts for 75 percent of sales at the weekly tea auction in the port city of Mombasa, according to its website.

Family Bank is Kenya’s fifth-biggest lender by outlets. The bank said in April it plans to begin trading its shares on the Nairobi Securities Exchange next year. The listing will take place “in the fullness of time,” Chairman Wilfred Kiboro said at today’s media briefing.

Last month, the bank announced plans to raise 1.25 billion shillings ($14.5 million) by selling stock to existing shareholders. The offering, which will fund the bank’s expansion, closed on Dec. 7 and attracted bids for 61 percent more shares than were offered, Kiboro said, without providing further details.

Insurance, Loans

KTDA owns stakes in other businesses including Majani Insurance Brokers Ltd., Green & Feather Ltd., a provider of small loans, and is involved warehousing tea, trading and packaging, Managing Director Lerionka Tampati said at the briefing. The company plans to further diversify into fabrication and manufacturing of tea equipment, he said.

Earlier this month, KTDA began managing two tea factories in Rwanda, Tiampati said in an interview. The management contract will last for seven years at a fee of 3.5 percent of revenue and an additional 1.5 percent whenever it exceeds agreed targets, he said. In Kenya, KTDA earns a fee of 2.5 percent for the 65 tea factories under its management, he said.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net.

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