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AFRASIA Kingdom Ltd intends to raise US$95 million of funding required to meet the Reserve Bank minimum capital requirements for its banking unit by issuing shares to private investors. The group owns 100 percent shareholding of Kingdom Bank, a local commercial bank.
If approved by the shareholders at an extraordinary general meeting on November 29, the private placement will be conducted by way of a phased programme.
The financial service group will raise U$15 million through private placement under phase one. Under this stage, the group will raise a total of US$20 million. The other US$5 million will be raised through a rights issue, according to a circular to shareholders.
Last year, the central bank raised minimum capital levels for banking institutions, setting the minimum capital requirements for commercial banks at US$100 million by June 2014.
“The increase in the minimum capital requirements for commercial banks coupled with changes on the capital account due to provisioning arising from non-performing loans has necessitated the injection of additional capital,” the group said.
“Additional capital will strengthen Kingdom Bank Limited’s capacity to underwrite additional business and maintain its market share.
The extra capital will also allow the company to implement the Crustmoon share buyback. The Reserve Bank of Zimbabwe now requires all banking institutions to migrate to Basel 2, which requires a substantial capital base to absorb any potential shocks from non-performing assets.”
In terms of the rights offer, 140 726 147 shares will offered to shareholders registered on November 27, 2013 at a subscription price of US$0,03553 per share at a ratio of 0,21 shares for every one AKZL share held. Any shares not taken up by the shareholders under the rights offer will be taken up by the AHL, the underwriter.
In addition to the rights issue, AKZL will issue about 2,67 billion shares to private investors at an offer price on US$0,03553 per share.
Although shareholders will be advised and entitled to participate in each of the phases of the private placement, they may approach the company whenever they wish to purchase shares.
As part of the transaction, the management is also seeking to broaden the prospects of strengthening the company’s financial position by offering potential investors preference shares. Subject to shareholders’ approval, the issue of preference shares will complement without increasing the targeted amount to be raised.
Online Reporter