, NAIROBI, Kenya, Oct 10 – NIC Bank Limited’s recently concluded Rights Issue has been oversubscribed by 238 percent after shareholders and other investors applied for over Sh7 billion worth of new shares compared to the targeted amount of Sh2 billion, realising a total subscription performance rate of 338 percent.
NIC Bank Group Managing Director James Macharia said that the remarkable performance is a testament of the confidence their shareholders and the investor community has in the banks growth and expansion strategy.
The bank had targeted to raise additional capital of Sh2 billion by offering 98.7 million new shares to the existing shareholders in the ratio of one new share for every four ordinary shares held at an Offer Price of Sh21.00 per new share.
NIC Bank Group Managing Director James Macharia said: “Our performance in the past has been steady, consistent and commendable despite the uncertain and volatile operating environment characterised by unpredictable movements in interest rates, inflation, exchange rates and other key macroeconomic variables. ”
After the closing date of the Rights Issue, there were 12.7 million untaken rights which will be allocated on a pro rata basis to eligible shareholders who have applied for additional shares according to their rights entitlement as of the closing date of the offer.
Macharia added that in view of the oversubscription of the Rights Issue, First Chartered Securities Limited and ICEA LION Asset Management Limited, who in aggregate hold a 24.9 percent stake in NIC Bank Limited, have decided not to participate in the take-up of the untaken rights.
The funds raised through the Rights Issue will be used to finance the expansion of the operations of NIC Bank, both locally and in the greater Eastern African region.
The Bank recently opened a new subsidiary in Uganda, NC Bank Uganda Limited, which commenced operations on 1st June 2012 and it has also been present in Tanzania since 2009, where it provides commercial banking services through its subsidiary, NIC Bank Tanzania Limited.
Through these and other regional subsidiaries planned for the future, the Bank aims to tap into the numerous opportunities arising from the regional convergence of markets and economies under different trade agreements such as the East African Community.
The funds raised through the Rights Issue will also be used to invest in a state-of-the-art core banking system, T24 provided by Temenos, and the expansion of our branch network in the countries where the Bank is present.
The 98.7 million new shares will start trading at the Nairobi Securities Exchange (NSE) on October 23 with the dispatch of payment of refunds through Electronic Funds Transfer or Refund Cheques scheduled to commence on the same date.
This is the second cash-call by NIC Bank through a Rights Issue, the first being in 2007 when the bank raised Sh1.7 billion from the NSE with an oversubscription rate of 49 percent.
Since then, NIC Bank Group’s profits have grown by a compounded annual growth rate of 36 percent from Sh1 billion in 2007 to Sh3.6 billion in 2011 and the Group’s revenues have also grown steadily from Sh2.4 billion in 2007 to Sh6.6 billion in 2011.