ICDC firm picks advisers for private placement offer

Funguo Ltd, an investment firm whose largest owner is parastatal ICDC, has appointed Standard Investment Bank the lead transaction adviser for a private placement offer (PPO) targeting large investors.

Funguo said Standard Bank will lead the capitalisation plan with Simba & Simba Advocates handling the legal work while Funguo Registrars Ltd will manage the share register.

Lawrence Mwathe, the chief executive officer, said the offer will target sophisticated investors such as pension and fund managers.

“We are at a penultimate point in our PPO effort. These experts will help us put together the documentation that we need to go to market with.

This is a limited offer that will be made only to a selected group of high net-worth individual and corporate investors,” he said.

“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 Mr Mwathe in a statement.

Funguo did not indicate how much it is seeking to raise or within what period. As at June 30, 2013, the company founded in 1987 had a paid-up share capital of Sh196.6 million and an asset base of Sh613.17 million.

It has invested in real estate, quoted and unquoted stock and fixed income instruments. Local firms have been on a capital raising spree through rights, bonds issues and an initial public offerings (IPO).

Bullish outlook

Analysts say that despite a challenging first half-year, companies continue to raise funds confident the environment will improve.

Both UAP and Britam successfully issued bonds and DTB had an oversubscribed rights issue. The Nairobi Securities Exchange also recently did an IPO which was heavily oversubscribed.

NIC’s bond offer is ongoing while Real People, Home Afrika and CIC Insurance are also plan to issue bonds. Julians Amboko, a research analyst at StratLink Global, said the first half was challenging due to insecurity that hurt key industries like tourism.

He, however, added that companies expect the general economy will improve in the long term.

“The long-term outlook is likely to more bullish given the marked resilience that Kenya has exhibited after economic shocks such as the post-election violence and the 2008-2009 recession.”

ICDC has a 26.73 per cent shareholding in Funguo, followed by Seta Holdings (14.79 per cent) and Mount Kenya Investments with a 0.33 per cent stake. The balance is owned by 300 investors.