[2008-07-17]  KCB rights may be oversubscribed
The search for an additional Sh5 billion capital by Kenya Commercial Bank (KCB), through a rights issue closes on Friday.
The rights have been on offer since July 23, and their subscription will see the bank increase its capital base. Transaction advisors are optimistic that the rights will be over subscribed.
“The uptake of the rights have been very good, in fact we are seeing a number of shareholders applying for additional shares just in case others do not take up their rights,” said Mr Job Kihumba of Standard Investments Bank.
This is a second rights issue by the bank to raise additional capital to fund its expansion strategies in the region. The first issue was carried out in 2004 and sought to raise Sh2.45 billion.
The rights are being sold at a discounted price of Sh25 and shareholders are entitled to one share for every nine held.
The rights proceeds are expected to strengthen KCB’s capacity to lend and expand its branch network to over 50 branches in the region. The bank also plans to upgrade technology so as to increase its services.
The bank has grown its asset base to Sh132 billion as of last year and recorded an increase in its profits before tax to Sh4.22 billion.
The Government, a key shareholder in the bank did not take up its rights, as part of its strategy of divesting its share holding. The State is expected to raise at least Sh1.4 billion from the sale of 58 million more shares that it was entitled to in the offer.
By choosing not to participate in the offer, the Government’s share holding effectively reduces from 26.2 per cent to 21.47 per cent.
During the Housing Finance rights issue, the state did also not take up its rights, further reducing its participation in the mortgage financier.
During the launch of the offer, KCB chairman Peter Muthoka noted that the issue would ride on the wave of the successful Safaricom initial public offering, which was over subscribed by about 400 per cent.
Like in the IPO, the commercial bank has been offering up to 90 per cent financing to shareholders.
The additional shares are expected to begin trading at the Nairobi Stock Exchange on August 25.

Source: BDAFRICA