Why I&M Bank chose rights issue to raise capital

I&M Bank (Rwanda) Plc on Friday 25th September morning officially opened applications for its Rights Issue following approval by Capital Market Authority and the Rwanda Stock Exchange.

A rights issue presents an opportunity for current shareholders to increase their stake in a company, for a reduced cost or special price.


 In the process, shareholders increase their ownership of a company's stock without diluting the value of shares held.


The I&M Bank Rwanda Rights Issue presents a chance for existing shareholders the opportunity to increase their stake in the Bank by buying 1 new share for every 5 ordinary shares they hold at a discounted price of Rwf 39.60.


 For instance, a shareholder with 1000 shares can buy a maximum of 200 shares.

The discounted price of Rwf 39.60 is against the current price of shares, Rwf 46 as of last trading by market close on Friday.

From the rights issue, the Bank plans on raising Rwf 8 Billion in the stipulated 16-day trading window which will close on Friday 16th October 2020. A total of 202,000,000 new shares will be issued.

The development was presented and approved by shareholders during their Annual General Meeting on June 22 this year held virtually.

Shareholders are advised to visit their brokers through whom they bought I&M Bank shares to conclude their Rights Issue Shares purchase. 

Reasons for Rights Issue

According to the Bank, proceeds from the right issue will go into availing long term funding for sustainable business growth as well as to fund investment in the Bank’s technological platforms for enhanced efficiency in service delivery to its customers.

The capital will, among other things, go into expansion and maximization of digital platforms which has been deemed as a game changer for the local and global financial scene. In addition, this will facilitate the Bank to respond to the growing customer’s demand for loans and advances.

Adoption of digital services -which is expected to drive up financial inclusion, ensure more services to clients and improve the Bank’s relevance on the local scene- comes at costs such as acquisition of systems and necessary infrastructure and training of staff.

However, once complete, the development will see the Bank in an ideal position to reap the returns on the investment through ways such as larger client pool, reduced costs of operations, integration into multiple operations among others.  

I&M Bank said that some of the proceeds will also go towards buffing up capital to cater for the possible adverse impact of COVID-19 on the economy and thereby on the Bank’s operations.

Following the outbreak of the pandemic and its various effects on a section of Banks’ clients, there has been uncertainty on the effects on the banking sector globally.

Among the effects could be demand for credit as well as reduced ability of some clients to pay back loans in time especially severely affected sectors hence the need to raise funds to maintain operations.

Robin Bairstow the Chief Executive Officer of I&M Bank Rwanda said that the Bank has had healthy results across multiple metrics across the years as well as continued growth in aspects such as assets size, credit, deposits and number of clients among others.

In the first half of 2020, I&M Bank registered a Rwf 2.2bn after-tax profit in the first half of 2020 despite the pandemic and the resultant economic slowdown.

This was among other things due to the Bank’s strategy that aims at enhancing products capabilities, growth of retail business as well as digital solutions to enhance banking service.

“Since the AGM back in June 2020, we have seen considerable interest from our Institutional shareholders asking to increase their number of shares held and the new investors who have been waiting for this opportunity to invest in I&M Bank Rwanda. In addition to acquiring additional shares at a good price, It is worth noting that this a non-dilutive pro-rata way of raising capital to shareholders” Bairstow said.

The Bank’s shareholders can be summarized as; BCR Investment Company, AfricInvest Evergreen Investments and the public and individual investors as well as bank’s employees.

The lender’s net interest revenue recorded an 8 per cent increase in 2019 to Rwf22 billion from Rwf20.2 billion in 2018.


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