NIC Bank plans Sh2 billion rights issue for expansion
Posted Wednesday, March 28 2012 at 19:04
NIC Bank expects to complete its Sh2 billion rights issue by end of July, making it the second listed firm to tap the capital markets this year.
Mr James Macharia, the bank’s chief executive officer, said that the rights issue was awaiting requisite approvals.
Mr Macharia spoke on Wednesday during the signing of an agency banking partnership with Kenya Post Office Savings Bank (Postbank).
“We are in the process of getting advisors and service providers. We have an annual general meeting scheduled for May 2, where we will get formal approval from our shareholders,” he said.
During the release of its full year results late last month, NIC officials said they would seek an increase in the authorised share capital and subsequent raising of an additional Sh2 billion through a rights issue.
Shareholders will also approve the setting up of a Uganda subsidiary on which the bank is expecting to spend Sh961 million (USh25 billion).
“Thereafter it will be probably six weeks or two months maximum and hopefully after that the money will be in the bank,” Mr Macharia said.
NIC will come to the capital market for cash at a time when investors, who have been going for short term fixed income securities and Treasury bills, are cautious about investing in stocks.
However, Mr Macharia said that the bank was optimistic that the rights issue would be a success.
In 2007 the bank offered 16.48 million shares through a rights issue that attracted Sh1.7 billion and oversubscription of 49 per cent.
Kenya Airways will launch a rights issue next Monday that seeks to raise Sh20.68 billion through the sale of 1.477 billion additional shares which are expected to start trading at the Nairobi, Dar-es-Salaam, and Kampala bourses on June 12.
Diamond Trust, Co-operative Bank, and CfC Stanbic have indicated that they would be raising funds through rights issues to fund their expansion plans.
On Wednesday, NIC and Postbank signed an agreement that will allow NIC’s customers to access their accounts though Postbank’s 97 branches and its agency banking model country wide.
NIC has 20 branches, its customers will now be able to make transactions such as cash depositing, withdrawals, and loan payments through Postbank’s branches.