NIC bond gets Sh6.5bn offers

September 5, 2014
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Institutional investors offered to take up 90 percent of the issue/file
Institutional investors offered to take up 90 percent of the issue/file
NAIROBI, Kenya, Sept 5 – The NIC Bank bond issue targeting institutional and retail investors has received offers of Sh6.5 billion, representing a 30 percent oversubscription from the expected Sh5 billion.

Institutional investors offered to take up 90 percent of the issue, while retail investors accounted for the remaining 10 percent of the bond issue which was available from August 21 to September 3.

“The success of the bond is a vote of confidence on the Bank’s long-term growth strategy. The money raised is critical in strengthening our capital base so as to support growth in our loan book for both the SME and corporate segments,” NIC Bank CEO John Gachora said.

“This is a major milestone in support of our corporate strategy which calls for robust capital levels and a sustainable funding programme.”

The bond is the first issue under the Sh8 billion Medium Term Note Program that was recently approved by the Capital Markets Authority (CMA) and upsized to Sh5 billion from the original Sh3 billion.

The bond issue is part of a major capital-raising program initiated by NIC Bank as it seeks to grow its corporate client base as well as to enhance its branch channels to reach more Retail and SME customers across the region.

As part of this plan, NIC Bank also plans to raise Sh2 billion through a Rights Issue subject to getting CMA approval.

The bank will list the medium-term note at the Nairobi Securities Exchange (NSE).

NIC Capital Limited, a subsidiary of NIC Bank Group, was the lead arranger for the transaction.

According to NIC Capital Managing Director Maurice Opiyo, the bond is an opportunity for investors to diversify their fixed income portfolios at a good return on investment.

“We saw a big appetite for the medium-term note with investors taking advantage of the opportunity. There is an increasing appetite and acceptance of corporate bonds as an alternative source of funding for Kenyan Companies,” Opiyo said.

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