Capital Markets
TransCentury cash call misses Sh2 billion target
Friday April 07 2023
Transcentury CEO, Nganga Njiinu at a past event. FILE PHOTO | DIANA NGILA | NMG
Investment firm TransCentury has missed the target in its bid to raise Sh2 billion through a rights issue following low shareholder subscription.
The cash call, whose results were released Friday, raised Sh828.1 million, a 40.13 percent subscription from the uptake of 752.8 million new shares.
The infrastructure-based investment firm had offered shareholders 1.876 billion shares valued at Sh2.063 billion, at five new ordinary shares for each held for Sh1.10 each.
Shareholders took up 480.1 million shares worth Sh528.1 million before the application for additional 498,725 shares with a value of Sh548,598.
A further 272.7 million shares were taken up by converting shareholder loans for Sh300 million.
Private equity firm Kuramo Capital, with a 25 percent stake in the company, opted to convert part of its Sh1.9 billion in loans extended to TransCentury to pay for its portion of the rights issue.
TransCentury has not disclosed the conversion size, which would likely see Kuramo raise its stake in the firm to a controlling hold.
The trading of the new shares at the Nairobi Securities Exchange (NSE) is expected to commence on April 26.
The rights issue opened on December 29 with the funds earmarked for recapitalising the business, reducing debt and unlocking working capital.
The cash call was extended from the initial closing date of January 23 to February 3, indicating that the take-up may have been below expectations.
It was further reopened on March 20 to 31 after shareholders approved the Kuramo shareholder loan conversion at an extraordinary general meeting on March 16.
Read: Kuramo to take 83pc stake in TransCentury debt deal
Cash-strapped firms offer rights issues to raise capital by allowing existing shareholders to purchase new shares at a discount compared to the market trading price.
Read: TransCentury plans sale of Sh1bn properties in Kenya and Uganda
But in recent years, companies have shunned the practice on account of falling share prices at the NSE.
Only Crown Paints issued a cash call in 2021, compared to 15 rights issues between 2010 and 2016.
TransCentury’s share price has fallen through the rights issue and closed trading for the week at Sh0.93 or 15.5 percent below the rights issue offer price.
