money markets
TransCentury’s cash call misses its Sh2 billion target
Friday 07 April 2023
Transcentury CEO, Nganga Njiinu at a previous event. image file | Diana Ngella | NMG
Investment firm TransCentury has missed the target in its attempt to raise Sh2 billion through a rights issue following undersubscription to shareholders.
The cash order, the results of which were announced on Friday, raised Sh828.1 million, a 40.13 per cent underwriting of the purchase of 752.8 million new shares.
The infrastructure-based investment firm offered shareholders 1.876 billion shares worth 2.063 billion shillings, on five new ordinary shares each at 1.10 shillings.
Shareholders purchased 480.1 million shares worth Sh528.1 million before placing an order for 498,725 shares worth Sh548,598.
A further 272.7 million shares were purchased by transferring shareholder loans of Sh300 million.
Private equity firm Koramo Capital, which owns a 25 percent stake in the company, has elected to transfer part of its 1.9 billion financial shillings loan to TransCentury to pay off its share of the rights issue.
TransCentury did not disclose the size of the transfer, which could potentially see Koramo raise his stake in the company to a controlling stake.
Trading of the new shares is expected to begin on the Nairobi Stock Exchange (NSE) on April 26.
The rights issue opened on December 29 with funds earmarked for recapitalizing the business, reducing debt and opening up working capital.
The cash call has been extended from the initial close date of January 23rd to February 3rd, indicating that buying may be below expectations.
It reopened again from March 20-31 after the shareholders approved the transfer of the Koramo shareholder loan at an extraordinary general meeting on March 16.
is reading: Koramo acquires 83 percent of the Trans-Centuri debt deal
Cash-strapped companies offer rights issues to increase capital by allowing existing shareholders to purchase new shares at a discount to the market trading price.
is reading: TransCentury plans to sell $1 billion worth of properties in Kenya and Uganda
In recent years, however, companies have avoided this practice due to falling stock prices on the New York Stock Exchange.
Crown Paints only issued a cash call in 2021, compared to just 15 between 2010 and 2016.
TransCentury’s share price fell through the rights issue and closed trading for the week at Sh0.93 or 15.5 per cent below the rights issue bid price.
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