Diamond Trust Bank targets Sh1.8b in third Rights Issue

After two successive Rights Issues, Diamond Trust Bank (DTB), has launched a third seeking to raise Sh1.81 billion.

Plans to raise the additional have gathered steam, with the issue being priced at a discounted Sh74 per share.

The price represents a 27.5 per cent discount from the bank’s prevailing share price of Sh102 at the Nairobi Securities Exchange (NSE).

 “The market conditions are ideal for this rights issue. The price is attractive and the fundamentals of the bank are solid,” said Amish Gupta, Director-in-charge of Investment Banking at the Standard Investment Bank (SIB) Ltd, the joint Lead Transaction advisors and Sponsoring stockbrokers together with Kestrel Capital Ltd.

In 2006 and 2007, DTB raised $30 million through two successive rights issue and in 2008 the bank received a total of $25 million from the International Finance Corporation (IFC) in the form of long- term line of credit.

The bank used part of the funds for regional expansion with a view of using a wide branch network to grow its market share in the small and retail banking business.

In the latest issue the bank will be offloading an additional 24.6 million shares to the existing shareholders in the ratio of one share for every eight held at the closure of the register on July 2.The issue is set to commence on July 17 and close on August 10.

The results of the issue would be made public on September 3 while the new shares will start trading at the NSE from September 12.

“We are expecting serious interest from institutions and foreign investors,” Gupta told The Standard yesterday.

The additional capital will be used to fund the bank’s strategic expansion plan which has already seen DTB increase its investments, in the last few years, in the group’s subsidiaries in Tanzania, Uganda, Burundi as well as expand its branch footprint in Kenya.

The bank, whose pre-tax profit for last year rose 24 per cent to Sh4.3 billion from the previous year’s Sh3.5 billion, is betting on regional expansion initiatives to consolidate its market share in the small and retail banking to bolster its bottomline.