NAIROBI, November 18 – The Cooperative Bank Initial Public Offer (IPO) has fallen short of expectations missing the target by 30 percent.
The bank said in a statement that it has so far received Sh4.7 billion in subscriptions against a target of Sh6.7 billion even as final tallies are awaited from brokers and selling agents.
Under the agency agreement, brokers have five days – that is up to November 21 – to forward all the applications.
The anticipated Sh6.7 billion target was a drop from the initial figure of Sh10 billion. The just concluded IPO comes in the wake of a bearish market and lacklustre demand amongst investors.
“The 70 percent subscription rate is commendable not withstanding the unprecedented hostile environment with the global financial crisis,” the bank’s Chief Executive Officer Gideon Muriuki said in the statement.
Mr Muriuki said the listing of the bank on the bourse had been elusive since 1997 after the plans were shelved as a result of the 1998 bomb blast.
The bank’s directors had set a minimum success rate of 30 percent in attaining listing at the NSE considering the prevailing market conditions.
The bank projects good profitability this year with a pre tax profit of Sh3.4 billion and retained profits of Sh2 billion which the Mr Muriuki said will give the bank a recapitalisation in excess of the required Sh6.7 billion.
The additional capital is expected to fund the bank’s expansion drive, including opening branches in the region, upgrading its banking system and launching of new products.
According to the statement, the additional capital will be more than adequate to cover the bank’s strategic growth in the areas of branch and regional expansion, ICT investment, new products particularly in mortgage finance and SACCO connectivity.
“The allocation results will be announced by December 16 and listing and commencement of trading of the shares on the Nairobi Stock Exchange will be on the December 22,” Mr Muriuki said.
The bank last year concluded its turnaround strategy moving from a loss-making entity in 2001 with a pre-tax loss of Sh2.3 billion to a profit-making one, recording a pre-tax profit of Sh2.3 billion in 2007, with anticipated improvement in 2008.