KCB to release rights issue results on Tuesday

Investors in Kenya’s largest bank by assets, KCB, will on Tuesday know whether their bid to pump in more money to finance expansion was successful.

Kenya Commercial Bank is expected to announce results of its Sh15 billion rights issue.

Group chief executive Martin Oduor-Otieno declined to give details ahead of the announcement, but gave indications that the bank may have fared well.

“We are not disappointed by the results of the rights issue,” Mr Oduor-Otieno told Business Daily.

An associate of one of the parties involved in the transaction said that earlier indications were not promising, adding that there was increased activity towards the deadline.

“If there is an oversubscription it may not be by much and it is likely that it just managed to be taken up,” said the associate.

He did not want to be named to avoid violating Capital Markets Authority rules that prohibit premature disclosure of the results.

George Bodo, a research and investment analyst with Genghis Capital, said KCB was unlikely to collect the amount sought due to the short duration of the rights issue and investor scepticism.

“With Sh220 billion in assets investors were asking why KCB would need Sh15 billion more,” said Mr Bodo.

Subscription of 90 per cent will still be seen as a success, said analysts, especially coming at a time when the bonds market is outshining the equity market.

The analysts said that an oversubscription will be an indication of the market’s ability to raise funds, coming at a time when there has been caution in the equities market as investors played a wait and see game ahead of last week’s referendum.

Focus has been on fixed income securities such as bonds and bills which have outpaced the equities markets.

Bond turnover has outshone equity trading this year.

Data from the Nairobi Stock Exchange shows that half year bond turnover stood at Sh158 billion against Sh41 billion in the equities market.

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