Business Daily (Nairobi)
Washington Gikunju
24 April 2008
Co-operative Bank shareholders will today discuss a proposal to float the company at the Nairobi Stock Exchange.
While the shareholders are looking for avenues to realise the market value for their holdings, investors see the bank as another opportunity for broadening their portfolios.
The chief executive, Mr Gideon Muriuki, announced earlier this year that the bank would be rolling out a Sh5 billion initial public offering (IPO)- a final testimony to the institution's turnaround after suffering a near collapse from suspected looting and mismanagement in the late 1990s.
It is however not yet public what percentage of the bank's shares would be floated at the Nairobi Stock Exchange (NSE), though the minimum stake that an entity can list through an IPO is 25 per cent.
Board members held a meeting at the bank's Nairobi offices yesterday where the IPO issue was discussed. But Mr Muriuki declined to discuss with The Business Daily the gist of the deliberations, saying it would pre-empt today's meeting which would be attended by new Co-operatives Development minister Joseph Nyagah.
The bank is 100 per cent privately owned by more than 57,000 shareholders who include the cooperative movement as corporate entities and individual Sacco members.
The shareholders currently trade the bank's shares through private over the counter transactions.
Another unresolved issue is the timing of the IPO, with the NSE's schedule already looking quite busy and the investors anxious to learn the outcome of the Safaricom IPO.
The KCB rights issue is also expected in the market anytime from June. NSE vice chairman James Wangunyu said yesterday that the stock exchange expects to handle at least two private IPOs this year, which he could not however identify until the impending deals are confirmed. This is in addition to the Safaricom IPO which is believed to have mopped up at least Sh50 billion from investors and the upcoming KCB rights issue through which the lender expects to raise Sh5 billion.
Private equity group Transcentury Ltd, The Nairobi Stock Exchange and Dyer and Blair Investment Bank have all been linked with a possible public listing later this year, while mortgage company Housing Finance is also expected to tap the capital markets through a rights issue.
Assuming a shareholders' approval this morning, the Cooperatives Bank IPO could be held any time after July, taking into account the three-month duration normally taken to prepare company information memorandum and prospectus.
"The IPO could come any time after July after investors have received their Safaricom IPO refunds assuming that the offer has been oversubscribed. The KCB rights issue is also expected to close at around the same time," said Mr Wangunyu whose firm, Standard Investment Bank, has been appointed as the lead transaction advisor for the KCB rights issue.
Cooperative Bank has made profits in the last six years hitting a pre-tax figure of Sh2.32 billion in 2007, an 85 per cent rise from Sh1.26 billion realised in 2006.
NSE public listing rules require that an institution must have made a profit in at least three of the last five years before seeking to be listed.
Mr Muriuki said at the release of the bank's results in February that loans and advances to customers grew by 35 per cent to Sh38.4 billion in 2007 compared to Sh28.4 billion in 2006.
Customer deposits increased to Sh55 billion from Sh48 billion the previous year, a 15-per cent improvement.
The management has projected a growth in pre-tax profits of over Sh1 billion to about Sh3.5 billion this year.
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