Diamond Trust Bank share price unchanged after new rights issue

Diamond Trust Bank group chairman Abdul Samji (left), and Nairobi Securities Exchange boss Eddy Njoroge during the bell ringing and listing of the bank’s new rights on August 26, 2014 at the NSE in Nairobi. PHOTO | SALATON NJAU |  NATION MEDIA GROUP

In Summary

• The rights issue opened on June 30 and closed on July 25.
• It attracted bids worth Sh16 billion against the Sh3.6 billion the bank sought to raise.

By JOSHUA MASINDE
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Diamond Trust Bank’s share price remained unchanged at Sh260 after it listed new shares on the Nairobi Securities Exchange (NSE) on Tuesday.

The bank, which had 22 million new shares that were sold in an oversubscribed rights issue, closed trading unchanged, with only 600,000 shares transacted.

The rights issue opened on June 30 and closed on July 25. It attracted bids worth Sh16 billion against the Sh3.6 billion the bank sought to raise.

FINANCE EXPANSION

The lender’s chairman, Mr Abdul Samji, said the new funds would finance expansion and explore new opportunities in sub-Saharan Africa.

“Further, the funds will strengthen our ability to achieve our long term strategic objectives, anchored on deepening our presence in Eastern Africa and expanding to new markets in sub-Saharan Africa.”

Refunds to investors who had applied for more shares than they were allocated were made on Friday 22.

Investment analysts have, however, proposed that firms offering a rights issue consider taking up the extra shares under a different class of shares which do not carry voting power.

“These results were actually very surprising. Going forward, we are saying that when we structure transactions, we need to take into considerations that we could heavily oversubscribed.

“My view is that we should not return this money, but absorb it as debt or under a different class of shares,” said the director of investment at Standard Investment Bank (SIB), Mr Amish Gupta.

GREAT DEMAND

The bank had offered 22 million rights to shareholders at a discounted price of Sh165. The demand was for 96 million shares.

“This signals the great demand from domestic and international investors for investment opportunities in the capital markets,” NSE chairman Eddy Njoroge said.

Earlier, the bank’s chief executive officer, Ms Nasim Devji, said a big number of shareholders controlling about 80 per cent of the firm’s equity, took up their rights.