HF Group’s share price fell by 7.5 percent to Sh4.18 yesterday in the first trading session, after the lender announced that its upcoming rights issue will be priced at Sh4 per unit when it opens in two weeks’ time.
The stock opened the week at Sh4.52 a share, which represented a premium of 13 percent on the price of the rights units.
Rights shares are usually discounted compared to the prevailing market price as an incentive to investors to participate in an offer. The fall in the lender’ share price, thus cuts the discount at hand ahead of the sale.
The stock traded within a range of Sh4.07 and Sh4.50 per share, moving 594,300 units on the day for a total traded turnover of Sh2.48 million.
The lender is eyeing Sh5.9 billion via the sale of up to 1.49 billion shares in the cash call, inclusive of a green shoe option of Sh1.38 billion (from 346.15 million shares) in case the offer is oversubscribed.
The sale will see shareholders who are on the company’s books by November 1, offered the chance to buy three new ordinary shares for every one held, with the rights also tradable at the Nairobi Securities Exchange(NSE), for those looking to add to their exercisable option.
Existing shareholders need to take up their full rights to defend their stakes in the bank from being diluted, either by fellow shareholders who take up their allocation or by new entrants who purchase rights from the market.
HF currently has 384.6 million shares in issue, with the rights sale set to raise this to 1.54 billion units if fully subscribed, or 1.88 billion if there is also a full uptake of the green shoe option.
The lender’s biggest shareholder Britam Holdings has already signalled its intention to defend its 48.2 percent stake (185.46 million shares), which will see it inject an additional Sh2.23 billion in the lender for its allocation of 556.4 million rights units.
The outlay would rise to Sh2.89 billion in the event of a green shoe issuance, which would see Britam’s prorated allocation rising to 723.3 million units.
HF last ran a rights issue in 2015, issuing 116.67 million shares priced at Sh30 each, at a rate of one for every two held.
The offer raised Sh3.5 billion from investor bids worth Sh9 billion. The funds were earmarked for branch expansion and expansion of mortgage lending capacity.
