TransCentury Plc, an infrastructure investment firm’s stock, traded above the rights issue price for the first time since the company’s cash call began on December 29, increasing the investment firm’s chances of raising KES 2 billion in new capital.
The company’s share price increased 8.65 per cent to close at KES 1.13, exceeding the rights issue offer of KES 1.1 per share.
Previously, TransCentury stock had traded below the cash call level, thwarting capital-raising efforts because it was cheaper to buy shares on the open market.
If the share price rise continues, the rights issue will be priced at a discount to the market price.
The closing price on Friday represents a 44.87 per cent increase from the 52-week low of KES 0.78 set on December 9, 2022.
On Friday, investors purchased 104,100 shares of the company, one of the highest volumes since the peak of 10 million units traded on December 23, 2022.
TransCentury’s cash call puts investor faith in the company to the test, as it has a negative equity position of KES 9.07 billion due to multi-year losses.
Kuramo Capital, the company’s largest shareholder, has expressed its confidence by investing up to KES 1.1 billion in the rights issue, potentially increasing its stake in the company to more than 48 per cent.
Kuramo owns 25% of the infrastructure investment firm’s 93.7 million shares.
Companies have avoided offering the correct issues to raise new capital in recent years, reflecting the general decline in share prices at the Nairobi Securities Exchange.
Only Crown Paints has issued a rights issue in 2021 since 2016, compared to 15 such corporate actions between 2010 and 2016.
Companies grant shareholders the right, but not the obligation, to purchase new shares at a discount to the current market price in these rights offerings.