By GEORGE NGIGI, gngigi@ke.nationmedia.com
In Summary
- More than 10 local businesses have announced plans to raise billions of shillings in pursuit of growth plans that were frozen during 2013’s highly charged elections.
- Some companies have also recapitalised their retained earnings by issuing shareholders with bonus shares.
- KenGen is expected to be the first in the market next month with a Sh15 billion cash call through a rights issue.
Kenyan companies will be seeking to raise more
than Sh50 billion in the next six months, signalling a build-up of
business confidence from last year’s relative inactivity caused by
election fears.
More than 10 local businesses, including banks,
have announced plans to raise billions of shillings in pursuit of growth
plans that were frozen during 2013’s highly charged elections –
offering investors a wide range of options.
Mortgage lender, Housing Finance, tops the list of companies that are hungry for cash with a Sh20 billion bond plan while electricity producer KenGen, National Bank, Diamond Trust Bank (DTB) and Uchumi have announced plans to ask current owners for money through rights issues.
Some companies have also recapitalised their retained earnings by issuing shareholders with bonus shares.
Last week Co-op Bank
received its owners’ approval to recapitalise Sh700 million by issuing
them with an additional share for each six held by them.
NIC recapitalised Sh270 through a bonus of one for every 10. Others that have made bonus issues are CIC Insurance and South African Liberty Holdings.
Some market watchers have expressed concern that
the multi-billion-shilling fundraisers may stretch Kenya’s capital
markets to the limit, leading to failure to meet targets.
Enough cash
But analysts like Burbidge Capital’s Vimal Parmar
reckon there is enough cash in the economy to support the demand if
well-priced for investors.
“The fundraisers are a show of confidence among
these firms that the government will somewhat continue growing the
economy. If the pricing is right, the liquidity is there to meet the
demand,” he said. The bullish business outlook should be an
encouragement to President
Uhuru Kenyatta’s government, which is facing the
challenge of poor performance in key segments of the economy such as
tourism and agriculture.
Tourism has been hugely affected by the persistent wave of insecurity while agriculture is being rocked by poor weather.
The expansion plans indicate growing consumer
demand in spite of the continued rise in the cost of goods that pushed
inflation above seven per cent last month.
Data from the Central Bank of Kenya shows that
credit uptake grew at a faster pace than that targeted by the regulator,
underlining investor appetite for cash.
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