RE: “Foreign investment in Rwandan banks, welcome” (The New Times, July 2). It will be interesting to find out how the investment banking M&A teams involved in this transaction value of BK's estate. Clearly the so-called "market" has done a pretty bad job at valuing BK for quite some time.
In any case, one wonders whether the Government is ready to cede part of its 29.5 per cent stake in BK to BCP or whether the board of directors has been advised to issue new share capital.
In the event that shareholders are diluted in due process, then they are entitled to a one-off windfall payment equal to and a commensurate function of their respective equity dilution percentage. But considering the paltry 11.2 per cent holding by retail investors, I would strongly advocate for price discovery via competitive bidding at the RSE.
Or even better still, how about chucking the fox into the pigeon pen: let BCP competitively bid for its desired shareholding in the market. This would make Kamanzi & Ingabire far wealthier than present given the constrained actual free float (retail shareholding segment currently comes in at 11.2 per cent of total issued shares).
This would aid in price discovery given that the RSE isn't a "true market" in the real sense of capital markets: illiquid and lacks deep-pocketed market makers. In any case, a counter-balance weight on BK's board in the form of an "activist strategic investor" is welcome news.
Value creation for capital owners is presently pedestrian at best.