NIC shareholders approve Sh2.1 billion cash call to fund regional growth

Shareholders of NIC Bank have given the nod for the listed lender to raise Sh2.1 billion via a Rights Issue. The proceeds of the Rights Issue will be used to accelerate its regional expansion bid, as it eyes a larger slice of the East African cross-border financial market.

The move paves the way for NIC Bank, one of the oldest listed firms on the Nairobi Securities Exchange, to seek approval for the transaction from the Capital Markets Authority.

NIC Group Chairman James Ndegwa told shareholders that the additional capital would boost the lender’s increased focus on the region as the East African Community integration opens lucrative opportunities for banks to finance cross-border trade. “We really appreciate our shareholders’ support and with this approval, we believe that they will fully participate and assist the Bank realise its target,” said Mr Ndegwa.

In 2007, NIC raised Sh1.1 billion through a Rights Issue, which was 49 per cent over-subscribed. In 2009, the bank acquired a majority stake in Tanzania’s Savings & Finance Commercial Bank (S&F) which it re-branded NIC Bank, Tanzania in 2010.

In August 2012, NIC Bank successfully raised a further Sh2.1 billion, which was over-subscribed by 238 per cent. In February of the same year, it set up a commercial banking subsidiary in Uganda, NC Bank Uganda Limited (NCUG) which began operations on June 1 of that year.

The Bank has continued to register steady growth by tapping the growing regional economy.
Earlier last month, the bank announced it would pursue a mix of debt and equity by raising additional capital through a corporate bond and rights issue.

NIC Group Managing Director John Gachora said the two-pronged strategy would also enable the lender to grow its SME book and diversify its business portfolio. “If successful, the corporate bond and rights issue will help us focus on continued growth in the coming years with more focus on deal-making opportunities in Kenya and the region,” said Mr Gachora.

It is expected that the Rights Issue will be launched in September, subject to the necessary approvals, and close towards the end of November 2014.

Last month, the bank announced an 11 per cent jump in profit before tax for the first six months of 2014 driven by increased lending to key sectors in Kenya and the region. It posted a Sh2.9 billion profit compared to Sh2.6 billion recorded during the same period last year.