KenGen lines up shareholder cash call to fund projects
KenGen is expected to raise money through a rights issue this year. The firm has massive ongoing and medium-term projects that need injection of billions of shillings. Photo/FILE
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Capital Markets Authority acting chief executive Paul Muthaura said Tuesday that KenGen, Uchumi and Express Kenya are expected to tap the capital market for funds this year.
The electricity generator has massive ongoing and medium-term projects that need injection of billions of shillings.
At least three companies are expected to raise money through rights issues this year, the capital markets regulator has said, pointing to another active year after a record-breaking 2012 in terms of shareholder cash calls.
Capital Markets Authority acting chief executive Paul Muthaura said Tuesday that the Kenya Electricity Generating Company (KenGen), supermarket chain Uchumi and logistics firm Express Kenya are expected to tap the capital market for funds this year.
Uchumi Supermarkets and Express Kenya last year announced that they intended to raise funds for expansion, while KenGen is yet to make its intention public.
The electricity generator has massive ongoing and medium-term projects that need injection of billions of shillings.
“KenGen also indicated the possibility of having a rights issue. This is prospected for 2013,” said Mr Muthaura.
KenGen, which is 70 per cent owned by the government, sold 658.9 million shares of its 2.198 billion shares through an initial public offering in April 2006 at Sh11.90 each.
This was 30 per cent of its share capital, after which the company listed its stock at the Nairobi Securities Exchange the following month.
The share rose to a high of Sh49 after listing and then dropped to a low of Sh6.80 last year but as at the close of trading on Tuesday, the stock was priced at Sh12.45 compared to its closing price at the end of last year of Sh8.80.
In November 2009, KenGen sold infrastructure bonds worth Sh23.43 billion to fund its projects which included upgrade of its hydro-power plants, geothermal, thermal and wind power generators.
“If you look at the money that they need, they are still behind. There was talk of a secondary share issue then the share price dropped. Given where the share price is today, there could be a dilution,” said Francis Mwangi, a research analyst at Standard Investment Bank.
The analyst said that Kenya Power’s capital needs are about Sh20 billion every year and KenGen’s are significantly more than that, adding that significant capital raising by the company through a rights issue could see the share price drop.
