Coop pushes ahead with listing

September 29, 2008

, NAIROBI, September 29 – Co-operative Bank of Kenya has now said its plans to list on the stock market through an Initial Public Offering are still on course.

A statement signed on Monday by Nairobi Stock Exchange Chairman James Wagunyu, the bank’s Managing Director Gideon Muriuki and the transaction adviser Jimnah Mbaru of Dyer and Blair Investment Bank, said they were optimistic that the Sh10 billion IPO would be successful despite the challenges in the market.

Last week Mr Wangunyu had called for the postponement of the IPO to February next year citing the depressed equities and stock markets, inflation, a plunging shilling and high costs of borrowing. Apart from being the NSE Chairman, Mr Wangunyu is also the Managing Director of Standard Investment Bank, which together with Faida Investment Bank form the Lead Sponsoring Broker consortium for the Co-op Bank IPO.

The IPO Steering Committee said it had reviewed the issue at length and taken cognisance of the fact the listing comes at a time when there are some notable challenges facing capital markets both locally and internationally.

“The concerns include a global recession precipitated by the collapse of key financial institutions in the United States, current inflationary pressure and investor apathy following the Safaricom IPO,” read the joint press release.

The statement said the steering committee had discussed the matter at length and considered the concerns expressed by the NSE.  It however noted that the bank had seen commendable business and operation re-structuring over the last seven years as well as continued profitability.

The banks full circle turnaround in profitability from years of loss making may perhaps be the economy’s best documented case study, said the joint media statement, adding that there was great appetite among Kenyans for this share putting into consideration the solid base of the seven million member Co-operative movement.

It said: “The bank has continued to report excellent profitability with the profit before tax of Sh1.7 billion as at June 30, indicating that they will exceed a Sh3.3 billion target for the year 2008.”

They steering committee said the issue would provide a Guaranteed Minimum Allocation for retail investors as a measure to encourage participation and provide equity to all investors. The issuer also said it had put in place a highly automated IPO processing infrastructure for efficient processing and timely payment of refunds.

“The prevailing circumstances also provide an opportunity for this IPO to rejuvenate the market and re-institute the market appeal” said the committee, adding that there was no feasible basis to determine how long the bear in the market would prevail.  The bank, its transaction advisor and the NSE invited Kenyans to purchase what they referred to as a Kenyan success story, when the offer was formally launched.

The Co-operative Bank of Kenya is the fourth largest bank in the country and the funds raised through the issue are expected to expand its branch network. The bank also intends to introduce mortgage products and enhance its communication technology infrastructure.

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