The Commercial Bank of Africa (CBA) has an ongoing medium term note (MTN) bond issue to raise Kshs 8 billion ($90 million) with green shoe option for another Kshs 2 billion. Investors in the MTN bond will receive 12.75% paid semi-annually for the next six (6) years.
- The minimum investment is Kshs 1 million ($11, 235) for the MTN that is priced in multiples of Kshs 100,000 thereafter and runs from 26 November to 10 December. Other recent financial bonds in Kenya include CFC raising Kshs 5 billion, an 11% infrastructure bond from the Central Bank of Kenya (minimum investment was Kshs 100,000), NIC Bank’s 12.5% bond which was oversubscribed by 30% in raising Kshs 6.5 billion (90% of which came from institutional investors), and Britam also got Kshs 6 billion (minimum investment was Kshs 100,000 for the 13% bond).
- In case of an over-subscription those who apply for more than Kshs 100 million ($1.1M) of the MTN will get priority in allocation.
- The CBA bond will be listed on the fixed income securities market segment of the Nairobi Securities Exchange
- CBA which has 23 branches in Kenya, 12 in Tanzania, and 1 in Uganda, plans to use the funds to strengthen Tier 2 capital and fund regional expansion. CBA is looking at partnerships with other institutions to make it a stronger regional financial services platform.
- The MTN bond is budgeted at Kshs 67 million (0.67% of the target for the fund-raising) and this is split as: arrangement fee – Kshs 40M(CBA capital), legal fee – 4M (Coulson), Accountants – 3.5M (PWC) , marketing – 10.5M (Ogilvy), and the NSE gets Kshs 0.8M while the Capital Markets Authority (CMA) gets Kshs 8 Million.
- CBA’s EPS was Kshs 15.22 in 2013, with a 4.38 DPS, payment of over Kshs 1 billion. Shareholders include a CBA Employees Share Scheme (ESOP) who own 2.5%.