Banks turn to shareholders as they step up expansion plans

By James Anyanzwa

Standard Chartered Bank has priced its Sh3.2 billion rights issue at a discounted Sh145 per share.

The bank has so far received the regulatory approvals to off-load an additional 22 million new ordinary shares to shareholders in the ratio of one new share for every 13 existing shares held.

In a statement on Tuesday, the bank said the offer price represents a discount of 21 per cent to the six months volume weighted average price of Standard Chartered shares  – up to and including August 31.

“We are particularly excited to launch this rights issue as we find the issue to be attractively priced at a 32 per cent discount to the bank’s closing price on Tuesday of Sh212 per share,” said Amish Gupta, director at Standard Investment Bank (SIB), the Issue’s Lead Sponsoring broker.

The bank expects to use the proceeds to fund its 2013-2015 strategic agenda.

 Meanwhile CfC Stanbic Holdings’ Sh4 billion rights issue kicks off today amid increased expectations of full subscription after the anchor shareholders committed to seize all their rights. The Kenyan arm of the South Africa-based financial conglomerate – Standard Bank Group – is seeking to off-load an additional 121.7 million shares to the existing shareholders at a discounted price of Sh33 per share.

Stanbic Africa Holdings Limited (SAHL), the company’s majority shareholder, which owns a 60 per cent stake in CfC Stanbic Holdings Limited, said it would take up all its rights. The proceeds of the cash-call will finance the expansion of the group’s activities in Kenya and Southern Sudan.

Emerging opportunities

“The main purpose for the funds we intend to raise is to capitalise the operations of CfC Stanbic Bank, our subsidiary, over the next few years to enable it take emerging opportunities in Kenya and South Sudan,” said Kitili Mbathi, Group Managing Director.

In a statement on Tuesday, Mr Mbathi explained that the planned rights issue is part of the Group’s wider strategy, which seeks to alter the mix to reduce the cost of funds.

“The plan is to embark on a period of sustained and accelerated growth of our business operations, especially growth of assets and loans to customers,” he said.

“The larger strategy calls for the group to change the funding mix to raise the proportion of funding that comes from endowment customer deposits. We expect this to lower the cost of funding and generate annuity income for the company.”

The additional shares will be allotted to the existing shareholders in the ratio of four new shares for every nine held. Shareholders wishing to sell their rights will have until October 8 to do so, with the closure of the offer slated for October 16.

Commercial banks that have sought funding from the shareholders this year include Diamond Trust Bank, whose Sh1.8 billion cash-call was oversubscribed by 86 per cent.

Bonus issue

NIC bank has also announced a bonus issue as the bank seeks to raise Sh2 billion from its shareholders to finance regional expansion.

The bank has reserved one new share for every 10 held after the issue, which is priced at Sh21 per share.