ICDC's Funguo Investments in Sh420m private offering

Funguo Investments Ltd, a company partly-owned by parastatal ICDC, is raising Sh420 million through a private offer.

The Funguo offer, which marks the first time it is opening ownership to outsiders, kicked off on September 23 and closes on November 25.

Sources privy to the deal said the private placement offering (PPO) targets sophisticated investors such as fund managers and pension firms.
“The firm is looking to increase its shareholding in companies that it has invested in,” said the source.

Finer details such as how much will go to what investments cannot be revealed until the offer is over going by the Capital Markets Authority (CMA) disclosure rules, but the firm is reported to be targeting large investors with 30 million new shares, each costing Sh14 at a minimum of Sh2.1 million per investor.

The company’s results show that as of June 2014, close to two third of its portfolio was made up of investments in non-listed companies in diverse areas of real estate, insurance and manufacturing industries.

Other investments are in select stocks at the Nairobi Securities Exchange, Treasury bills and bonds.

Funguo Investments had a Sh669 million asset base with an unquoted equity accounting for Sh439.9 million or 66 per cent. Quoted stocks took up Sh166.87 million (25 per cent), government securities Sh62.14 million (nine per cent) while property and others assets accounted for less than one per cent of the portfolio.

READ: ICDC firm picks advisers for private placement offer

In insurance sector the firm has invested in Aon Kenya Limited, UAP Holdings while in manufacturing it has interests in Coca-Cola bottler Almasi Ltd. Heri Ltd is its property investment firm.

Previously the firm said the offer is meant to give it quick access to funds it needs to invest as per its strategic plan.

“This PPO is in line with our medium-term review of our five-year strategic plan where we decided to fast-track some of our strategic initiatives,” said Funguo Investments chief executive Lawrence Mwathe in a statement.

Standard Investment Bank is the lead transaction adviser and broker for the private offer while Simba & Simba Advocates are the legal advisers.

It is not clear if the major shareholders will take part in the offer but analysts say that such issues usually have the backing of anchor shareholders.

ICDC has a 26.73 per cent shareholding in Funguo, followed by Seta Holdings (14.79 per cent) and Mount Kenya Investments with a 7.3 per cent stake. The balance is owned by 300 investors. Funguo is a public investment company that was founded in 1987 by local investors.

Companies, public and private, have been actively raising cash this financial year on the bet of high returns as the business environment improves.

Family Bank shareholders approved a Sh3.5 billion rights issue late last month while NIC Bank’s Sh2.1 billion rights issue is expected to open on October 23.