Government-owned shares in 20 private companies will be
transferred to the Agaciro Development Fund, Rwanda’s sovereign wealth
fund, to boost its assets.
The Agaciro Development Fund was set up in 2012 when donors suspended funding Rwanda’s development budget, and largely depends on contributions from the public and the private sector for its equity.
The Agaciro Development Fund was set up in 2012 when donors suspended funding Rwanda’s development budget, and largely depends on contributions from the public and the private sector for its equity.
The fund’s grants dropped from Rwf5.6
billion ($6.6 million) between January and June 2016, to Rwf5 billion
($5.8 million) in the first half of this year. But continuous investing
of the grants in high- return investments has helped the fund grow its
equity over the years.
The fund’s assets and interest
income grew by double digits in the first six months of this year. The
assets hit $54.9 million between January and June, from the $41 million
reported during the same period in 2016.
Agaciro
Corporate Trust Ltd chief executive Jack Kayonga said, “We are excited
because we want to become a fund of a significant size that will
guarantee Rwandans the Rwanda they want.”
The
government shares earmarked include those in BK Group Plc, a holding
company of Bank of Kigali, BK General Insurance and BK TecHouse. These
could be the first to be transferred in a process that is already at an
advanced stage.
“The legal process of effecting the
transfer is underway and will be submitted for shareholders’
consideration during the annual general meeting in May, 2018,” said Marc
Holtzaman, chairman of the Bank of Kigali, at a shareholders
extraordinary general meeting recently.
“I think this was the best decision for the growth of the bank,” added Mr Holtzaman.
The meeting also voted to have the bank raise more funds through a rights issue.
The
government owns 198,534,600 shares in the Bank of Kigali, a 29.5 per
cent shareholding that gives it a controlling stake. It is not clear
whether shares of the Rwanda Social Security Board, a public pension
fund that owns a 25.1 per cent stake in Bank of Kigali, will be also
transferred to the fund.
The National Agricultural
Export Board, which manages some tea and coffee companies in the
country, owns 0.1 per cent of the Bank of Kigali while other shares are
owned by retail and institutional investors.
Although
the full list of the 20 private companies whose government shares have
been targeted was not available by press time, Celestine Rwabukumba, the
chief executive of the Rwanda Stock Exchange, said that the
government’s 20 per cent shares in the Rwanda Stock Exchange are among
those to be transferred to the Agaciro Fund, a process that could be
completed next year.
Experts have welcomed the new
capital injection and the consolidation of government shares in
commercial investments, saying it will increase efficiency.
Rights issue
The
Bank of Kigali shareholders’ extraordinary meeting, approved the
board’s call to increase authorised share capital from $8.2 million to
$12.3 million through a rights issue next year.
At
least 348 million new shares are to be issued next year, to raise $100
million to finance the bank’s growth in the local market.
Although
the bank’s core capital is still above the 15 per cent minimum level
requirement by the central bank, chief executive Diane Karusi expressed
fears that without a new capital injection, the lender will find it
difficult to finance loans.
The banks nine-months
financial report covering January to September, shows that its tier 1
capital has dropped significantly to 18.9 per cent, from 22.1 per cent
recorded in 2015.
“The more we grow, the more capital we need. Our lending business has been eating up our capital,” said Ms Karusi.
“The more we grow, the more capital we need. Our lending business has been eating up our capital,” said Ms Karusi.
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