DTB banks on big shareholders to boost Sh1.8bn rights issue

The Aga Khan Fund for Economic Development, Habib Bank, Jubilee Insurance, the International Finance Corporation and The Diamond Jubilee Investment Trust collectively own 99.65 million shares, representing 51 per cent of DTB’s shareholding.

Principal shareholders of Diamond Trust Bank (DTB) are expected to boost the lender’s forthcoming rights issue by taking up their shares, lead transaction advisors for the transaction, Standard Investment Bank has said.

The Aga Khan Fund for Economic Development, Habib Bank, Jubilee Insurance, the International Finance Corporation and The Diamond Jubilee Investment Trust collectively own 99.65 million shares, representing 51 per cent of DTB’s shareholding.

The Nairobi Securities Exchange (NSE)- listed bank has a total of 11,230 shareholders.

“Based on the understanding that there is an intention and an expectation that the major shareholders will support the rights issue and based on the size of this issue, we are confident that it will be fully subscribed,” said Amish Gupta, associate director at Standard Investment Bank (SIB).

The anchor shareholders have however not yet given a guarantee to take up their rights.

DTB announced on Friday that it will offer additional shares to existing shareholders at a discount of more than a quarter compared to the counter’s Friday Sh103 closing price. The bank is seeking to raise Sh1.8 billion through sale of the new shares to finance regional expansion.

In 2006, the bank raised Sh2.3 billion through the sale of 15.5 million shares in a rights issue that was oversubscribed almost two times.

The following year it raised another Sh2.9 billion through the sale of an additional 23.29 million shares in yet another rights issue that was oversubscribed by 78 per cent.

The lender is Kenya’s 10th largest bank by assets.

It plans to issue 24.45 million new shares between July 17 and August 10.

Shareholders who will be on the register at the close of business on July 2 will get a chance to buy one share for every eight held at Sh74. “The rights issue price represents a discount of 17.84 per cent to the volume weighted average price of DTB ordinary shares on the NSE for the first day of trading from November last year to May this year,” said the bank in a notice to shareholders.

Analysts who are pointing to the bank’s performance over the past five years particularly after the previous two rights issues are expecting the coming one to generate interest from existing and new shareholders.

Kestrel Capital and SIB have been appointed joint lead transaction advisors while Apex Africa Capital has been appointed co-sponsoring stockbroker to help raise the funds.

Oraro and Company Advocates have been appointed legal advisors, PricewaterhouseCoopers as reporting accountants and Comprite Kenya as the data processing advisor.

“DTB is unique in that its shareholding consists of institutions and investors who hold on to the stock and they are keen not to have their shareholding diluted so by the look of things, I see either a full or an oversubscription,” said Samuel Wachira, general manager at Francis Drummond and Company.