KCB Rights Issue fails to get full subscription

By John Oyuke

Kenya Commercial Bank (KCB) third Rights Issue fell short of full subscription to earn the financial institution Sh12.45 billion in additional capital.

Though below Sh15 billion approved by shareholders, the bank registered a subscription of 82.56 per cent. This surpassed the minimum level of success outlined in the Information Memorandum.

Group Chief Executive, Martin Oduor-Otieno, said though the third rights issue fell short of full subscription, it has left the bank with sufficient cash to fund regional growth and increase loans.

He explained that the success of the issue sets the stage for KCB to grow its assets and liabilities by over Sh125 billion and Sh150 billion, respectively, while also investing in young subsidiaries to stabilise and turn them into profitability.

The Rights Issue was subject to a minimum success rate of 50 per cent of the Sh15 billion that KCB was seeking from shareholders, equivalent to Sh7.5 billion.

Group Chairman Peter Muthoka said the new capital position gives the bank sufficient cover to increase its business within the current momentum and be within the Central Bank of Kenya’s prudential ratios.

While announcing results of the issue in Nairobi yesterday, Muthoka said there would be ongoing incremental capital growth through earnings retention.

He said the total value of shares taken up was Sh12.45 billion, of which approximately Sh12 billion would be credited to the bank’s capital account after expenses.

Success in numbers

A total of 732.39 million shares were taken up against 887.11 million offered in the Rights Issue. As a result of the share issue, the Government’s shareholding has reduced from 23.6 per cent to 17.74 per cent.

Muthoka explained that as there was no oversubscription in the issue, the board has allocated all applicants 100 per cent of the number of shares applied for.

Following the allotment, the total number of issued ordinary shares increases to Sh2.95 billion of Sh1 each, up from Sh2.22 billion ordinary shares held before the Rights Issue.

The balance of 154.72 million untaken rights forms part of the bank’s authorised capital for future issuance. The authorised capital for the bank is 3.5 billion shares.

KCB shares shed 4.7 per cent to Sh18.10, as the bank reported its Rights Issue received less interest than it had hoped for.