Diamond Trust Bank Kenya is targeting to raise Sh3.63 billion in fresh capital in an ongoing rights issue. Through the issue, the bank intends to offer 22 million additional shares at a rights price of Sh165 per share. This represents a hefty discount of 32% over the bank’s share price, which trades at an average of Sh244 at the bourse.
The rights issue launched on June 30, 2014 will run until 25 July 2014. All shareholders in the bank’s share register as at close of business on 24 June 2014 will be entitled to participate in the rights issue. Other investors interested in acquiring the rights may bid for them during the trading window which is expected to run from 2 July 2014 to 15 July 2014.
Ms Nasim Devji, the bank’s managing director expressed confidence that the rights issue, which is being offered in the ratio of one new share for every ten shares held presently, will be strongly supported by the bank’s shareholders. “The board resolved to offer the rights at an attractive discount over the prevailing market price, given the unyielding support and unwavering loyalty demonstrated by the shareholders which has seen DTB’s operations grow from strength to strength across Eastern Africa in recent years,” said Ms Devji.
In the last year, the bank’s share price has rallied, rising by 4% since June 2013 and by 27% in the last six months. Ms Devji said the additional capital raised will play a key role to fund future asset growth, investment in the branch network and alternative channels in Kenya, as well as strengthen the group’s presence in East Africa, through additional investments in DTB’s subsidiaries in Tanzania, Uganda and Burundi. It will also enable the bank to explore future investment opportunities in other new markets in the region.
“The proposed rights issue accords the shareholders with the opportunity to increase their investment in DTB and continue to benefit from its growth,” said Ms Devji. Between 2006 and 2012, DTB Kenya undertook three sets of rights issues. The three were over-subscribed raising an additional capital of Sh4.1 billion in the aggregate from the market.
DTB is an affiliate of the Aga Khan Fund for Economic Development (AKFED), the economic development arm of the Aga Khan Development Network. Amongst the bank’s key shareholders are Habib Bank Limited and Jubilee Holdings Limited, both affiliates of AKFED, as well as the International Finance Corporation, the private lending arm of the World Bank.
