The Financial Markets Authority has received the authority's green light to raise Sh229 million of new capital through a limited offer.
The exercise will not be open to the general public but limited to existing shareholders and employees.
The company is looking to raise Sh229 million in what insiders believe is a test case being used to pave the way for a larger ticket fundraising through an offer targeted at the wider public further down the road.
The second limited offer has been approved in less than a week by the CMA. Last week, the market regulatory agency approved the issuance of the debut Sukuk by Linzi Finco Trust in Kenya to raise Sh3 billion.
AA, whose offering to members includes roadside assistance, information and advice about the purchase, maintenance and repair of vehicles, received CMA's approval on Wednesday afternoon and communicated the same to shareholders on Thursday.
AA Kenya offers motor vehicle valuation, negotiation of insurance premiums, and setting up petrol depots.
The capital raising comes just a day after AA Kenya announced the introduction of Signature Membership, at Sh3,000 per vehicle annually and Champion Membership for non-vehicle owners at Sh200 annually, as it looks to ramp up its membership.
AA Kenya was able to raise capital through demutualization, or sale of shares to new members in early 2022, but faced obstacles owing to the structure of the entity as an association and being in disregard of the law's requirements regarding capital raising.
The company has since transitioned from a public company, setting the stage for its planned capital raise.
In 2020, AA Kenya reported a net income of Sh11 million in 2020, a drop from Sh79 million in 2019 due to the impact of the Covid-19 pandemic on its business.
Sales fell to Sh472 million from Sh722 million in the same period. AE Kenya projected its revenue and profits to grow exponentially over the medium term from the actual performance seen in the past.
The company didn't publish its balance sheet at the time, which would show its assets and liabilities.
AA Kenya has said the need for capital raising was informed by, among other considerations, plans to venture into service centre business in major towns such as Nairobi, Mombasa and Kisumu.
The firm is also aiming to expand into Africa with a set of operations earmarked for Ethiopia and Rwanda.
Other strategic priorities outlined included opening more branches across the nation and establishing a modern driving school equipped with modern technology like simulators.