TransCentury Plc stock traded above the rights issue price for the first time on Friday since the company’s cash call opened on December 29, boosting the investment firm’s chances of raising Sh2 billion in new capital.
The company’s share price rose 8.65 percent to close at Sh1.13, surpassing the rights issue offer, which is set at Sh1.1 per share.
The stock had previously traded below the cash call level, frustrating the capital-raising efforts since it was cheaper to buy shares on the open market.
The share price gain, if sustained, will boost the rights issue which will represent a discount to the market price.
Friday’s closing price marks a 44.87 percent jump from the 52-week low of Sh0.78 that was set on December 9, 2022.
Investors bought 104,100 shares of the company on Friday, marking one of the biggest volumes since the peak of 10 million units that changed hands on December 23, 2022.
TransCentury’s cash call is testing investor faith in the company, which holds a negative equity position of Sh9.07 billion on the back of multi-year losses.
The company’s top shareholder, Kuramo Capital, has meanwhile expressed its confidence by committing to invest up to Sh1.1 billion in the rights issue in a move that could raise its stake in the company to more than 48 percent.
Kuramo currently has a 25 percent interest or 93.7 million shares in the infrastructure investment firm.
In recent years, companies have avoided offering the right issues as a way to raise new capital, a reflection of the general decline in share prices at the Nairobi Securities Exchange.
Since 2016, only Crown Paints rolled out a rights issue in 2021, compared to 15 such corporate actions between 2010 and 2016.
In these rights offerings, companies grant shareholders the right, but not the obligation, to buy new shares, usually at a discount to the current market price.
