New stocks will be allotted at three for every share held by Aug 10.
Kenya Re #ticker:KNRE will distribute two billion new shares to qualifying investors early next month in a move that will significantly boost the stock’s liquidity on the Nairobi Securities Exchange (NSE).
The company did not disclose when the bonus shares would be allotted but Image Registrars, which maintains the insurer’s shareholder list, says the stocks will be credited before August 10.
“There is no specific date but it will be done by early next month … before August 10,” an official of Image Registrars told Business Daily.
Kenya Re’s chief executive Jadiah Mwarania did not respond to our queries.
Shareholders approved the issuance of these shares at the firm’s recent AGM.
The new stocks will be allotted at a rate of three for every share held to investors who were in shareholder list as of June 14.
The insurer will spend Sh5.2 billion of retained earnings to pay for the new shares at a price of Sh2.50 each.
The new shares would have a market value of about Sh8.3 billion based on yesterday’s share price of Sh3.98, indicating an aggregate potential paper gain of more than Sh3 billion for shareholders.
The volume of its issued ordinary shares will rise to nearly 2.8 billion units from 699.9 million units on the allotment.
The insurer’s shares have historically been undervalued. Kenya Re will have a price-to-earnings ratio of about five, assuming the stock continues to trade at current levels after the bonus.
It will also have a net asset value per share of about Sh10 or 2.5 times the prevailing share price. Kenya Re has one of the lowest dividend payout ratios on the NSE.
The company nearly halved its dividend payout per share to Sh0.45 for the year ended December compared to Sh0.85 the year before.
Implementation of the bonus shares scheme was announced weeks after the dividend cut had been communicated to shareholders.
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