Kenya Electricity Generating Company’s (KenGen) new shares opened trading on the Nairobi Securities Exchange at Sh6.70, slightly higher than the rights issue price.
The listing of about 4 billion new shares follows a successful rights issue that saw the company raise Sh26.4 billion, making it the highest amount ever raised on the Nairobi bourse. Despite the principal shareholder, the Government, giving out Sh20.2 billion on the day the rights issue began, it posted a 92 per cent subscription. This means the firm missed the target by just Sh2.6 billion.
However, speaking yesterday during the bell-ringing ceremony, KenGen CEO Albert Mugo said the rights issue has relieved the company of its debt repayment obligation and offered additional headroom for debt.
“For the 8 per cent, we will just have to scale down a little on some of the projects and find a way of raising about Sh2 billion. With this equity, we will be able to borrow some more money,” he said.
He added that raising capital had gone beyond the reach of many companies but the capital market had offered a better alternative. NSE Chief Executive Officer Geoffrey Odundo said since KenGen’s entry into the bourse in 2006, it had acted as a catalyst for the activities on the bourse.
Geothermal
The firm’s initial public offer, according to Capital Markets Authority CEO Paul Muthaura, was the first to record an oversubscription, attracting over 300,000 new investors to the bourse. “It is historic with the largest rights issue ever on our market. This shows that the capital market remains a viable channel for raising capital. It shows how Kenyans are beginning well with investments in infrastructure projects,” said Odundo.
KenGen boss said key on the company’s agenda is to invest heavily in geothermal. Currently, the firm has pipeline projects to generate about 705MW, with 605MW being geothermal. According to Mugo, the bidding documents for the 140 MW Olkaria V project will be opened today. On 70 MW Olkaria I unit 6, he said the firm will be clearing with funding agencies very soon.
Other projects set to benefit from the rights issue are Meru and Ngong wind power projects as well as 140 Olkaria VII, the three having a combined capacity of 230MW.
“We also have Olkaria I that started operating in 1980s and has now reached the end of its life. We want to rehabilitate that so that it starts generating 51MW, up from the current 45MW,” added Mugo.
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