NIC Bank rights issue inches closer to 50pc

NIC Bank’s rights issue has inched closer to achieving the 50 per cent subscription target after its largest shareholder committed to take up its shares.

The information memorandum for the bank’s Sh2 billion rights issue reveals it has set a 50 per cent minimum subscription rate.

First Chartered Securities, the bank’s largest shareholder, has confirmed participation in the cash call.

“First Chartered Securities, which holds a 15.84 per cent of the issued shares in NIC Bank, has agreed to subscribe for their full entitlement under the rights issue,” reads part of the memorandum.

First Chartered Securities commitment assures NIC Bank of Sh328 million and the bank now needs only Sh708 million from other shareholders to hit the 50 per cent mark.

NIC Bank’s other large owners are ICEA Asset Management Limited with a nine per cent stake, Livingstone Registrars Limited (8.13 per cent), Rivel Kenya Limited (7.73 per cent) and Saimar Limited (4.13 per cent).

The offer is meant to raise Sh2 billion through the issue of 98.7 million shares at Sh21 each where shareholders will have the right to buy a share for every four held.

Analysts said that hitting the 50 per cent target is achievable given the core and strategic shareholding.

Francis Mwangi, a research analyst at Standard Investment Bank, said that since neither the Capital Markets Authority nor the Nairobi Securities Exchange has a definition for the minimum subscription, it is not possible to tell if the 50 per cent target is what the bank gauges it can get from the market or not.

Mr Mwangi said that similar to its peer Diamond Trust Bank (DTB), the shareholding structure made of few owners with large stakes would be a better indication on how the third rights issue of the year fares.

“They have goodwill from strategic shareholders who can make the rights issue successful,” he said.

DTB which opened its Sh1.8 billion rights issue last week set a 60 per cent minimum subscription rate for it to be declared a success with large shareholders already committed.

If Aga Khan Fund For Economic Development, Habib Bank, Jubilee Insurance, Diamond Jubilee Investment Trust (U), PDM Holdings Limited and the International Finance Corporation participate they will assure a 52 per cent subscription rate for the on-going rights issue.

NIC Bank plans to use the cash raised to expand its expansion.

“The funds raised through the rights issue will give NIC Bank the financial strength necessary to pursue both its local and regional expansion activities including its recent entry into Uganda,” said chief executive James Macharia.