NAIROBI: NIC Bank has announced an oversubscription of its third rights issue which targeted to raise Sh2.1 billion to boost capital and grow its retail and small and medium Enterprises (SMEs) business. The cash call raised Sh4.6 billion, representing a subscription rate of 221 per cent.
NIC Bank Group Managing Director John Gachora said the money raised will be used to diversify the bank’s business portfolio as it looks to roll out its ambitious growth strategy in the New Year with a focus on SMEs, corporate and retail customers.
“We are pleased with the outcome of the rights issue. Its success is a welcome vote of confidence by shareholders on the bank’s long-term strategy. The money raised will help us focus on continuing to invest in Kenya and the region,” he said. The bank had offered a total of 42,663,040 new shares at a discounted price of Sh49.25 per share on the basis of one new share for every 14 ordinary shares held.
The listing of the new shares and dispatch of payment of refunds through Electronic Funds Transfer (EFT) or refund cheques would be done on December 18. This was the bank’s third successful Rights Issue in seven years having raised Sh1.1 billion in 2007, which was oversubscribed by 49 per cent.
In August 2012, NIC Bank successfully raised a further Sh2.1 billion, which was oversubscribed by 238 per cent. Capital from previous issues was used to upgrade the bank’s core banking platform, expand in the region and to open new subsidiaries. The rights issue is part of a major debt and equity capital-raising programme initiated by NIC Bank earlier this year.
A Medium Term Note issued by NIC Bank received offers of Sh6.5 billion and was up-sized to Sh5.5 billion from the original Sh3 billion. This was the first tranche under a Sh8 billion bond programme. The bank listed and started trading its Sh5.5 billion bond at the Nairobi Securities Exchange in September.
Mr Gachora said NIC Bank closes 2014 on a high note following the successful capital raising and business growth.
Last month, he added, the bank reported a Sh4.7 billion profit before tax, a 19 per cent year-on-year growth, for the third quarter ending September 30. “We remain optimistic that we will continue on this growth trajectory into the New Year. We will focus on penetrating retail and SME markets and increase our footprint in the region,” he observed.
LENDING BASE
Early in the week, the lender signed loans worth $55 million (Sh4.87 billion) with the International Finance Corporation (IFC) that would provide it with long term funds to substantially grow its lending base across the region. The first of the loans signed this week, would see the private lending subsidiary of the World Bank advance $35 million (Sh3.1b) to NIC Bank in the form of a senior loan for onward lending to its personal and small and medium enterprise customers.
Through the second agreement, the IFC will advance to NIC Bank a Tier II capital loan facility of $20 million (Sh1.7b), further bolstering the bank’s capital position and allowing it to finance large scale projects across the region.
Gachora welcomed the deal with IFC, saying it would support the bank’s growth strategy in the Corporate, Retail and SME segments.
“This is a big deal for us. It creates a strong foundation for our medium-term strategy. The loans will enable us to grow our loan book, including financing projects with high foreign currency funding requirements.” he said.
