I&M Bank set to debut at the stock market on June 25
The I&M Bank building on Kenyatta Avenue, Nairobi. The bank has completed a reverse take-over that has merged its business with that of investment firm City Trust. FILE
What you need to know:
I&M Holdings, will start trading at Sh448 per share, the last average market price of City Trust before suspension from the Nairobi Securities Exchange (NSE).
Both City Trust and I&M Bank will operate as separate entities under one group after the merger, with the banking arm becoming the biggest business of the group.
I&M Bank shareholders will hold 92.7 per cent shares of the new entity.
I&M Bank is set to list at the stock market on June 25, completing a reverse take-over that will merge businesses of the lender and investment firm City Trust.
The new entity, I&M Holdings, will start trading at Sh448 per share, the last average market price of City Trust before suspension from the Nairobi Securities Exchange (NSE).
Both City Trust and I&M Bank will operate as separate entities under one group after the merger, with the banking arm becoming the biggest business of the group unlike previously when City Trust, owned just 7.28 per cent of the lender. I&M Bank shareholders will hold 92.7 per cent shares of the new entity.
“The bank will remain the operational hub of the group,” I&M told the Business Daily.
The bank said there will be no management changes, as the holding company will not have any staff under its direct employment.
Both I&M Bank and City Trust have effected share splits and swaps that investors will be expected to factor while assigning value to the newly listed entity.
City Trust had a market capitalisation of Sh2.6 billion at the time of suspension of its shares from trading, while I&M Bank, whose shares were not listed, had a total shareholders’ equity of Sh14.6 billion.
I&M Bank’s asset size of Sh144 billion as at the end of 2012, makes it potentially the sixth largest listed lender when compared with peers KCB (Sh367 billion), Equity (Sh243 billion), Co-operative Bank (Sh200.8 billion), Standard Chartered (Sh195 billion) and Barclays (Sh184 billion).
“CTL (City Trust Ltd) announces that it has received 100 per cent acceptances from all other shareholders of I&M Bank to exchange their shares in the bank, for those in CTL. Subsequently, there will be no mandatory acquisition period,” said CTL in a notice published on Tuesday.
It added that the banking sector regulator, the Central Bank of Kenya (CBK), has approved the merger. Analysts said investor demand for the new stock will mainly depend on the equilibrium price for the counter.
“I&M is mid-tier and has promising growth prospects, which will attract a lot of interest in the stock. Of course it is all dependent on the valuation,” said NIC Securities business development manager Samuel Gichohi.
“It all depends on the price,” said Francis Mwangi, a research analyst at the Standard Investment Bank.
Mr Mwangi said the last price of Sh448 is “deceptive” and, therefore, cannot give a fair guide of the listing price since at the time CTL had a paid up share capital of Sh28.6 million, which will increase by more than tenfold on conclusion of the deal.
The information memorandum says that consolidation of I&M and CTL paid up share capital should result in I&M Holdings having Sh391.8 million in paid up share capital.
Mr Gichohi, however, added that an indicator that listing could attract more shareholders on the company’s books can be seen by the over-subscription of the bank’s shares during the 2010 rights issue, which managed to raise Sh2.4 billion against a target of Sh1.9 billion.
I&M Holdings will be listed on the NSE’s Main Investment Market Segment. The lender mainly focuses on corporate banking, SME financing and serving middle and upper income earners. The bank has been boosting its capital base for regional expansion.
