KenGen targets Sh15bn in rights issue for growth

Albert Mugo, KenGen's new managing director and chief executive during a press conference at Stima Plaza in Nairobi January 15, 2014. Mr Mugo said his focus will be on capacity expansion and diversifying the company's power generation mix. Photo/Salaton Njau  Nation Media Group

By DAVID HERBLING

IN SUMMARY
The State-owned power generator is seeking to raise cash to fund building of new power plants that will grow its installed capacity to 3,000 megawatts by 2018 from the current 1,239 megawatts.
KenGen Wednesday said that it had set aside 2.21 billion new shares to existing shareholders for the cash call, valuing the fresh stocks at Sh30.6 billion.
The shareholders will be entitled to one new share for every one held if KenGen opts to use the entire stocks for the rights.


The Kenya Electricity Generating Company (KenGen) plans to open a Sh15 billion rights issue by the end of this year, marking its first cash call since listing on the Nairobi bourse in 2006.

The State-owned power generator is seeking to raise cash to fund building of new power plants that will grow its installed capacity to 3,000 megawatts by 2018 from the current 1,239 megawatts.

KenGen Wednesday said that it had set aside 2.21 billion new shares to existing shareholders for the cash call, valuing the fresh stocks at Sh30.6 billion.

The shareholders will be entitled to one new share for every one held if KenGen opts to use the entire stocks for the rights.

“We plan to raise Sh15 billion from our equity holders by the end of the year,” said Albert Mugo, who was tapped Wednesday as the new KenGen chief executive.

READ: KenGen picks Albert Mugo as new chief executive

“We will use the current financial arrangers for the bond. We will borrow from lenders to maintain a debt to equity capital structure of 70:30,” added Mr Mugo.

This means the consortium led by Barclays, Dyer and Blair Investment Bank, KPMG and law firm Hamilton Harrison & Mathews — currently arranging a Sh430 billion ($5 billion) through bonds and loans — will shepherd the cash call.

Mr Mugo was speaking Wednesday in Nairobi when he officially assumed the corner office at KenGen. The position fell vacant in June following the retirement of former chief executive Eddy Njoroge.

Simon Ngure has been the acting CEO while Mr Mugo was the head of strategy and business development at the power firm.

READ: KenGen appoints acting MD as Eddy Njoroge exits

KenGen appears to be going slow on plans to cede a significant stake to a strategic investor as part of the fund raising plan.

“It is something we’ll look at but not now,” said Mr Mugo in reference to the sale of a stake to new shareholders.

The firm in December received shareholder approval to create 7.78 billion shares of which up to 2.21 billion will be offered to its owners through the rights issue.

KenGen did not explain how it intends to use the remaining 5.56 billion shares, but the firm earlier talked of plans to sell stakes to equity investors in the race to raise the Sh430 billion in debt and equity between now and 2018.