NAIROBI, July 18 – A last minute rush characterised the final day of the Kenya Commercial Bank rights issue on Friday, as shareholders hurried to beat the deadline for an opportunity to take up additional shares at a reduced price.
KCB rights Issue Project Manager Julius Koros predicted an oversubscription, basing it on the applications received since the exercise started on June 23.
“We have to receive all applications first, verify them and confirm with brokers and agents before announcing the allocations on the 8th of next month,” he said.
ApexAfrica Investment Bank Marketing Executive Mohamed Abud Mohammed was in agreement that the possibility of an oversubscription was quite high.
Mohammed observed that most shareholders had applied for up to 200 percent more shares than their initial allocation of one extra share for every nine held.
This is a second rights issue by the bank and it was intended to raise Sh5.5 billion. The first issue was carried out in 2004 and it raised more than Sh2.45 billion.
This time, the rights were sold at a discounted price of Sh25, where shareholders were entitled to one share for every nine held.
KCB expects to increase its capacity to lend and expand its network to over 50 branches in the region.
The bank has grown its asset base to Sh132 billion 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 shareholding. 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 percent to 21.47 percent.
This new shares would be listed and begin trading in the stock market on July 25.