Kenyan bank shares trade after Rights Issue

August 19, 2010

, NAIROBI, Kenya, Aug 19 – Kenya Commercial Bank (KCB) on Thursday listed and commenced trading 723.3 million new shares at the Nairobi stock Exchange following a successful Rights Issue.
The Rights Issue raised Sh12.45 billion against a target of Sh15 billion that the bank was seeking to raise, marking an 82.56 percent success rate.

Speaking during the listing, KCB Group Chairman Peter Muthoka acknowledged concerns of possible dilution of the bank’s share price but said the bank would be working to ensure the bank guarantees decent returns to shareholders.

“The board and management of KCB are committed to improving the price of our share which analysts and observers concur are undervalued,” Mr Muthoka said.

The new KCB shares are also expected to be listed on regional bourses in Uganda, Tanzania, Rwanda and Southern Sudan.

This was the third Rights Issue offered by the bank after one in 2004 that raised Sh2.3 billion and another in 2008 whose proceeds topped Sh5.2 billion.

The recent Issue is expected to facilitate the institution’s strategy that focuses on consolidating the business in all markets they operate in.

Financial analysts had predicted that in the event that all those shares were not taken up, the price might be slightly volatile.

The bank’s share closed the day at Sh18.50, compared to an average of Sh21 before the Rights Issue was launched in July.

The bank received 55,996 applications from shareholders for a total of 637.2 million rights provisionally allotted to them. The balance of 154.7 million untaken rights will form part of KCB’s authorised capital for future issuance.

KCB Chief Executive Officer Martin Oduor-Otieno said the bank’s new capital position would allow it to double its business giving it an opportunity to grow revenues and enhance shareholder returns.

“This money comes in for us at a very appropriate time with all the developments we have planned and we intend to put into good use. In the last five years our profits have grown by an average of between 15 and 52 percent and our shareholders can look forward for continuation of this track record,” Mr Oduor-Otieno said.

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