Wachira Kang'aru
30 October 2008
Nairobi — The Co-operative Bank initial public offering launch on Thursday was met with optimism that a full subscription would be achieved.
Despite the currents stock price fall, the bank advisors, management and market regulators said they expect the issue to be successful.
"I have no doubt in my mind that the Co-operative Bank IPO will be a success," Capital Market Authority chairman, Chege Waruingi, said during the launch.
The bank is offering 701 million shares to the public priced at Sh9.5 each to raise Sh6.7 billion at a time when the stock market is experiencing reduced activity.
Currently, investors at the Nairobi Stock Exchange have lost over a third of their wealth due to falling share prices.
The optimism is, however, coming from expectation that the country's wider co-operative movement will drive the uptake of the shares.
"We urge all Kenyans from all walks of life, and particularly the seven million members of the co-operative movement to seize this great opportunity and purchase the shares," Minister for Co-operative Development, Joseph Nyagah said.
If successful, the money will go towards funding the bank's expansion drive, including opening branches in the region, upgrading its banking system and launching of new products.
"The reason this IPO is so significant is because it provides us with an opportunity to raise additional capital to support growth and expansion," Co-op Bank chairman, Stanley Muchiri said.
NSE chairman, James Wangunyu, said that the shares sale, which will run for the next nine days, could benefit from an expected recovery in the stock market performance.
Falling oil prices
"We expect the market to start recovery due to the falling crude oil prices, return to normalcy in supply of fresh commodities as well as the depreciation of the Kenya shilling making agricultural exports more competitive and Kenya a more affordable tourist destination," Mr Wangunyu said.
The bank recently finalised its turnaround strategy moving it from loss-making (pretax loss of Sh2.3 billion in 2001) to profit-making recording a pretax profit of Sh2.3 billion last year with a projection of Sh3.4 billion in 2008.
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