News Column

DTB to Seek Shareholder Nod for Fresh Cash Call

February 4, 2014

James Waithaka

Diamond Trust Bank has called for an extra-ordinary general meeting next month to ask its shareholders' to approver a fresh rights issue. This will be the second time in just under two years that the bank will be returning to the market seeking to raise equity from shareholders. DTB yesterday notified the Nairobi Securities Exchange of the intended EGM slated for March 4 . It will seek nod to increase its authorised share capital to Sh1.2 billion from the current Sh1 billion by creating 50 million new ordinary shares. It will issue up to 22 million shares (22,010,009) through a cash call to its shareholders, it said, subject to approval by the Capital Markets Authority and NSE's nod list the new shares. A rights issue entitles a company's existing shareholders to buy additional shares directly from the company in a ratio proportional to their existing holdings, within a fixed offer period. The lender made the previous cash call in July 2012 to raise Sh1.8 billion. It intended to use the proceeds for expansion. Moses Waireri , head of research at Sterling Capital , said cash calls are expected of tier two banks, which most of the time use the funds to expand operations. "It was expected... most tier two banks follow this strategy," he said. The DTB counter was among those that moved huge volumes last week at the NSE (4.75 million). The share closed at Sh214 on Friday, shedding 3.6 per cent from Sh222 a week before. George Bodo , head of banking research at Ecobank , in a tweet yesterday said there was a Sh1 billion foreign investor sale on DTB last week between Mon and Thursday prior to the share sale announcement. "... this wasn't normal," his tweet read in part. The bank's top shareholder as of April 2012 included the Aga Khan Fund For Economic Development , Habib Bank , Jubilee Insurance (also associated with the Aga Khan), International Finance Corporation , and Diamond Jubilee Investment Trust (U).

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Source: AllAfrica

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