Early last week, the largest commercial bank in the Tanzania banking sector, the CRDB Bank, officially launched a rights issue in order to help raise the overall share capital of their organization by as much as TShs 23.7 billion.
According to the banks Managing Director, Dr. Charles Kimei, the launch will also make it possible for the bank’s shareholders to acquire additional shares in the company that were proportionate to their current holdings.
“Rights issue will increase the liquidity of shares once listed and boost shareholders’ wealth as additional capital is raised and injected into business,” said Dr. Kimei.
The decision to launch the rights issue was requested by the bank’s Board of Directors and was ultimately approved at an Extraordinary General Meeting that was held in Arusha last December.
The launch of the rights issue represents the initial stage required in listing the bank’s shares at the Dar es Salaam Stock Exchange (DSE), which is scheduled to take place in June of this year.
Currently, this initial stage of rights issue is scheduled to run for 21 days, between January 26 and February 13, after which time any rights that have not been not sold to shareholders will be offered to the general public at an IPO that will be scheduled for a later date.
The CRDB Bank is a private commercial bank that was established in 1996 in association with the Danish International Development Agency (DANIDA).
The purpose of establishing the CRDB Bank was to replace the former Cooperative and Rural Development Bank, which was a public institution bank whose majority shareholder was the government of Tanzania, namely.
Boasting over 11,000 shareholders, recent reports have indicated that the CRDB Bank will likely sell approximately 197,866,560 of its shares.
According to Dr. Kimei, in order to assist in the transition, the CRDB Bank has already begun appointing outside assistance including their lead external expert, the Solomon Stock Brokers; their lead financial advisor, Dryer and Blair Investment Bank; their sponsoring brokers, Orbit Securities Limited; and their reporting accountants, PricewatehouseCoopers.
In addition, Abenry & Company is scheduled to work with the Bank in offering them sound legal advice, while they have the company ZK has been hired to focus on the bank’s public relations.
Initially, the process of the rights issue will begin with the distribution of Provisional Allotment Letters (PAL), which the shareholder must complete on exercising the rights.
After the PAL have been distributed and read, the shareholders will be asked to return them to the nearest CRDB Branch in order for them to be processed.
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