Cash strapped credit-only microlender Real People Kenya is seeking a Sh300 million capital injection to survive beyond March 2026.
The company, which is now locally owned after a management buyout that separated it from South African Real People Investment Holdings, has disclosed it will consider winding down operations if it fails to secure additional capital in the next nine months.
Real People Kenya reported a net loss of Sh19 million in the year ended December 2024, a reduction from the previous year's net loss of Sh93 million, pushing its accumulated losses to Sh789.3 million that cast a dark shadow over its future prospects.
“The shareholders have approved a management buyout and offer which will in part include additional capital injection of Sh300 million,” said Real People in its latest annual report dated April 25, 2025. The directors are satisfied that the company has or has access to adequate resources to continue in operational existence for the next 15 months, beyond which in the absence of capital injection we will have to consider winding down operations in consultation with the noteholders and shareholders,” added the microlender.
The management buyout of the troubled firm was subsequently concluded at a token price of $5,000 (Sh646,000), according to sources familiar with the matter.
Real People has been on the lookout for a strategic investor for the last six years. Management believes the lender is now more attractive to investors following separation from its previous owners and improved financial performance.
The credit-only microfinance is now owned by its executive directors who bought out South Africa's Real People Investment Holdings, whose presence was seen as a hindrance to securing new investors.
The microlender's woes began in 2016 after it issued a Sh1.63 billion bond the prior year. The proceeds of the bond were diverted to settle a shareholder loan owed to the parent company in South Africa. This has seen it struggle to pay the bond with the noteholders agreeing to take a 70 percent haircut on the principal amount in 2022 as they sought closure on the deal.
“The current board is a turnaround board whose role is to figure out how to deal with noteholders and also make the company investor ready,” said Real People's chief executive Robert Shibutse.
“The noteholders were not happy with our continued association with Real People South Africa and we also had to separate from them (Real People South Africa) so as to attract investors who felt they were not getting information. We have managed to do a management buyout and are now locally owned,” he added.
Mr Shibutse noted the lender had been meeting its quarterly payments of Sh3 million to noteholders who are still owed Sh447 million. He said the microfinance firm was looking at settling with the bondholders who have received part of their principal and interest.
“We are looking at the option of converting the debt to shares or we get another haircut and do a final payout,” said Mr Shibutse.
The lender's improved financial performance was attributed to cost cutting which includes reduction of payroll costs.
The lender's staff costs fell by nearly half in the year ended December 2024 to Sh57.3 million from Sh108.2 million in 2023. The lender had 49 employees down from 54 over the same period indicating the drop was largely driven by pay cuts.
Mr Shibutse noted the March 2026 timeline was in cognizance of the difficulty that the microfinance firm would face in raising capital in a politically charged environment as the country nears the 2027 general election.
