A half year after Diamond Trust , it’s now KCB conducting a second rights issue in the span of a few years. This comes at a time when international banks raising capital are facing more scrutiny than before.
KCB are back to ask their shareholders to chip in. In June 2004 they exceeded the 2.45 billion target and this time they are set to raise 5.54 billion ($86.6 million). How else is this issue different?
What has changed?
Then ; Now
June 04 : June 08
Focus – then Kenyan expansion & rebranding ; now East African expansion, Bank ESOP
New shares 50 million ; 222.1 million [but just 22.1 million in pre-split [PS] 2007 terms]
Price 50/= ; 25/= (actually 250 PS – pre-split 25% discount each time)
Market cap 8.7 billion ; 66.4 billion
2003 PAT 486 m ; 2007 2,974 million
Ratio 1:3 ; 1:9 (1 new share for 9 owned)
Result: oversubscribed; ? (Likely to be the same)
Cost of the offer
Budget:2004 offer – 104 million ; 2008 offer – 220 million
What costs more? : CMA approval fees – up 125% (13.75m), Transaction advisor – up 103% (8.1 million), PR/advertising – up 34% (17.4 m), Printing – up 30% (15 million), Reporting accountant up 26% (3.7m)
What costs less? Legal advisor down 58% (756,000), NSE fees down 50% (250,000)
Market players changed
NSE members 17:19
In Genghis Capital (new stockbroker?), Renaissance Capital, Bob Matthews, NIC (was solid) Afrika Investment (was Ashbhu)
Out: Francis Thuo, Nyagah, Solid, Ashbhu – stockbrokers
Morphed: Faida, Kestrel Standard Suntra (from brokers to investment banks)
IPO financiers: 2004 memorandum mentioned 10 banks and two building societies offering Rights Loans ; this time no mention as share loans are a touchy subject in 2008
Shareholders: Anchor shareholders – then and now : Government of Kenya (35%:26%), NSSF (1%, 7.8%), ICDCI (4.3%, 3.5%), Sunil shah, (2.06%, 2.33%) staff pension fund (4.12%, 2.32%)
Calendar: Record date 4/6, rights start trading 23/6, last day trade rights 11/7, last date to pay for rights 18/7, new share trade 15/8, [to stave dilution, investor accounts will be credited 10 days before new shares are listed]
Investment Decision: Advice on investing in KCB rights comes from the Nairobist newsletter.