Kenya Commercial Bank said its planned rights issue will be offered at a 21 percent discount, as it seeks to raise 15 billion (Kenyan) shillings to boost its core capital and fund regional expansion.
Kenyan’s largest lender by assets has a core capital ratio to weighted assets of just over 8 percent and 12 percent to loans, the bare minimum, and so needs to raise extra cash to help it grow long-term lending to mortgage borrowers.
“We want to continue growing our business in the region and we have hit that level where any new growth has to come from additional capital,” Martin Oduor-Otieno, the bank’s chief executive said in a statement on Tuesday.
The bank is issuing 887 million new ordinary shares at the rate of two for every five held, after originally looking to sell 1.1 billion shares.
The offer opens on July 1 and closes on July 23. Its shares were trading at 21.00 (Kenyan) shillings at 0745 GMT, up from the previous close of 20.75, and analysts said the pricing of the issue would be well received by shareholders.
“KCB trades on a Trailing PE of 10.00 and is the least expensive of the big capitalisation banks on this metric. Value investors will further appreciate the opportunity to upscale their exposure at a 20 percent discount to the prevailing price,” said Aly Khan Satchu, an independent analyst.
KCB has operations spanning the east Africa region from Tanzania to South Sudan. It says it has 212 outlets.