, NAIROBI, Kenya Jun 15 – The Kenya Commercial Bank has announced it will sell its Rights Issue to shareholders at Sh17 marking a 21 percent discount on the current share price.
Over the last six months, the banks shares have been trading at an average price of Sh21.50.
The bank will be seeking to raise a total of Sh15 billion through the 887.1 million shares being offered in the issue.
Making the announcement on Tuesday KCB Group Chairman Peter Muthoka said the bank’s rapid expansion into the region was putting pressure on the bank and that the injection of additional funding would help boost the banks capital base.
“The purpose of this rights issue is to raise additional capital to improve key bank ratios, fund business growth and consolidation across the markets and increase our capacity to provide long term finance,” Mr Muthoka said.
The offer will open at the Nairobi Stock Exchange on July 1 and closing on July 23. Allotment and announcement of the offer results will be made on August 5 and the shares is expected to begin trading at the NSE on August 19.
The Rights Issue will also be available to KCB shareholders in Uganda, Tanzania and Rwanda where the bank is cross-listed on the local bourses.
Shareholders will receive two (2) additional shares for every five (5) shares held.
The Rights Issue will increase the bank’s paid up capital to Sh3.1 billion shares of Sh1 each from Sh2.2 billion shares.
KCB is the largest bank by assets which currently stand at Sh195 billion. It is also the region’s largest commercial bank with 212 branches with operations in Kenya, Tanzania, Uganda, Rwanda and Southern Sudan.
As of first quarter results, the bank had managed to grow its balance sheet to Sh220 billion.
This will be the third Rights Issue by the bank and the largest in Kenya’s history (at Sh15 billion) after successful issues in 2004 (Sh2.45 billion) and 2008 (Sh5.5 billion).
KCB Chief Executive Martin Oduor-Otieno said the move is timely, as the bank had reached its cap in its ability to continue lending to customers.
“The growth in banks is determined by how strong you are from a capital base. You can only take so much deposits and write so much loans and advances if you have so much capital and today we have hit that level where any new growth has to come from new capital,” Mr Oduor-Otieno said.