September 05, 2014
Listed lender NIC Bank bid to grow its corporate client base as well as enhance its branch channels to reach more retail and SME customers is on track following the oversubscription of the bank’s bond issue.
The bond is the first issue under the Ksh 8 billion Medium Term Note Program that was recently approved by the Capital Markets Authority. The bond issue that was launched on August 21, 2014 was upsized to Ksh 5 billion from the original Ksh 3 billion.
“In the process of gauging investor interest, it became apparent there was greater demand in the bond issue than the original Ksh 3 billion we were seeking,” said NIC Bank Group Managing Director John Gachora. Gachora added that the additional funds would help to accelerate the banks long term growth plans.
The bond issue targeting institutional and retail investors received offers of Ksh 6.5 billion, representing a 30% oversubscription over the upsized amount of Kshs 5 billion.
Institutional investors offered to take up 90% of the issue, while retail investors accounted for the remaining 10% of the bond issue.
Mr Gachora said the bank was pleased with the outcome of the issue.
“The success of the bond is a vote of confidence on the Bank’s long-term growth strategy. The money raised is critical in strengthening our capital base so as to support growth in our loan book for both the SME and corporate segments,” he said. “This is a major milestone in support of our corporate strategy which calls for robust capital levels and a sustainable funding programme.”
The bank will list the medium-term note at the Nairobi Securities Exchange (NSE).
The bond was available to investors from August 21 to September 3 2014, with a yield of 12.5%.
NIC Capital Limited, a subsidiary of NIC Bank Group, was the lead arranger for the transaction.
According to NIC Capital Managing Director Maurice Opiyo, the bond is an opportunity for investors to diversify their fixed income portfolios at a good return on investment.
“We saw a big appetite for the medium-term note with investors taking advantage of the opportunity. There is an increasing appetite and acceptance of corporate bonds as an alternative source of funding for Kenyan Companies,” said Mr Opiyo.
The bond issue is part of a major capital-raising program initiated by NIC Bank as it seeks to grow its corporate client base as well as to enhance its branch channels to reach more Retail and SME customers across the region. As part of this plan, NIC Bank also plans to raise Ksh2 billion through a Rights Issue subject to getting CMA approval. NIC Bank Group Chairman James Ndegwa told shareholders at a recent EGM that the bank had decided to go for a combination of debt and equity as the most optimal option to finance business growth.
For further information, please contact:
NIC Bank’s Marketing & Communications Manager, Lena Karauri-Sitoyo, firstname.lastname@example.org or +254 20 2888390