Investors upbeat about DTB’s closing rights issue

Diamond Trust Bank shareholders are banking handsome premiums on trading rights even as the stock price at the bourse bucks the trend to rise to Sh243.

If the current DTB price, which is just Sh6 shy of its one-year high, holds up to the listing date existing investors who got rights by virtue of their holdings and those who snapped the rights in the secondary market stand to make gains.

Investors acquiring the rights from the market paid between Sh30.50 and Sh66.50 for them, and with the new shares priced at Sh165, they too look set to enjoy a good premium.

The DTB register closed on June 24 for the rights issue, with trading of rights in the market lasting from June 30 to July 15.

Pay or forfeit

The entire rights issue closes Friday, with investors expected to make their payments for their new shares or forfeit their rights.

“During rights issues we normally see stocks experience a price reduction in the market as investors anticipate a dilution. DTB has, however, come across as a highly coveted stock with its rights being taken up and some shareholders seeking to acquire additional ones from the market.

The rights issue has also not diluted the net asset value per share of the stock,” said ABC Capital corporate finance manager Johnson Nderi.

Major shareholders committed to taking up their rights, guaranteeing at least 42 per cent of the new shares would be taken.

Data from NSE shows that 1.68 million rights were traded at the bourse, which represents only 7.65 per cent of the 22.01 million rights issued by the lender, which has 220.1 million issued shares.