Find visitors' favorite businesstravel Hotels And.... Book your best!

East African Stock Brokers to Earn KSh310 million from Kenya Airways rights issue

15-April-2012

Stockbrokers will earn the most cash from the Kenya Airways rights issue expenses budget, pocketing half (Sh310 million) of the transaction costs amounting to Sh620 million as placement commissions.


The money will go to selling agents in the Nairobi, Uganda and Dar es Salaam stock markets.

“The aggregate placement commission (assumes) that the offer is fully subscribed,” says the national carrier’s information memorandum document outlining the transaction expenses.

Stockbrokers of the Nairobi and Uganda securities exchange will earn 1.5 per cent commission on the value of rights sold, while Tanzanian brokers will get two per cent.

The commissions will be a watershed for local stockbrokers whose earnings dropped sharply last year, as the investors shunned the market, which was marked by a 28 per cent fall in the NSE-20 Share Index.

Media companies will pocket Sh66 million, Citibank will get Sh47.6 million for underwriting services while an extra Sh37.3 million has been set aside for underwriter’s expenses.

The Sh20.6 billion share sale opened on April 2 and will close on April 27.

The new shares will commence trading at the bourse on June 12.
The transaction expenses budget respresents about three per cent of the total amount that KQ is targeting from the cash call.
The Capital Markets Authority will earn Sh51.7 million in approval fees, about 0.25 per cent of the amount the national carrier is aiming to raise.

Some critics have cited high transaction costs and long approval periods as factors that discourage businesses from raising cash at the capital markets opting instead for bank loans and private equity.

Capital Markets Authority chairman Kung’u Gatabaki, however, said the costs are not too high to discourage firms from raising capital at the capital markets.

“It is not selective to this one company but a question of the percentage of what lawyers and other transaction advisers charge, some of the costs are not negotiable as they are inscribed in law,” said Mr Gatabaki.

In 2009, in a bid to encourage more companies to go public, the then Finance minister, Uhuru Kenyatta, halved the listing fee to 0.15 per cent from 0.3 per cent, but did not put an upper limit of the fee.

Market players said there should be a review of the law to put a cap on the amount payable to the regulator.

“The market feels it is too high for large issues; during small issues it is not an impediment but when raising huge amounts capping may be the answer,” said an investment banker who requested anonymity to avoid antagonising the regulator.

The NSE introduction fees are capped at Sh1.5 million for initial public offers (IPOs) and at Sh500,000 for rights issues.

As per the CMA’s annual report, the regulator received Sh28.5 million from public issues last year, up from Sh12.8 million in 2010.


Some of the transactions conducted during that period include the British American IPO earning the regulator Sh8.7 billion, TransCentury and CFC Insurance Holding listings, both of which were at a fee of Sh5 million.

Others include rights issues by Kenya Power, TPS East Africa, Standard Chartered and Kenya Commercial Bank.

Capital raising plans for this year, which will contribute to CMA’s earnings include rights issue by Diamond Trust Bank, NIC and CFC.

UAP Insurance is also planning a limited public offer.

Consolidated Bank has also received approvals to issue a Sh4 billion corporate bond, a transaction that also attracts a fee from the regulator.

By George Ngigi: Business Daily Kenya

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to On the Equity Market : Africa Uganda Stock Markets News .



Haven't yet found what you Want...?

If you haven't yet found what you were looking for or you need detailed information about the subject matter on this page

then...

feel free to ask our business travel consultants.





Book a Prisons & Correctional
Charity Tour


Farmland for Sale
Prime Commercial Property
Entebbe Rd Land 4 Sale
Over 20 Farmland Parcels
Property & Plots of Land

Uganda Online SuperMarket
africaug.com
Online SuperMarket

Uganda Coffee Safari
Book My Coffee Tour

Uganda Honey
Uganda HoneyComb

Subscribe to our Business Travel Newsletter


Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Africa Uganda Business Travel News Digest.

Hotel Booking

Car RentalCar Hire

Africa Uganda Shipping & Handling ServicesShipping & Handling Services


Our Sponsorship Policy


Apple Guavas available
Africa Uganda Plants GuideAfrica Plants Guide

Charity Investment Guide
Changing Lives

Africa Uganda SMS Guide
Africa Bulk SMS

Poultry Investment Guide
Poultry Business Guide

Related Pages



Uganda Hotels Directory

Uganda Hotels Booking Guide


Houses U can buy Uganda Real Estate Guide Industrial/Farmland Deals

Uganda Real Estates Guide


The Mountain Gorilla

Uganda Safari Guide

Uganda Weather Today





Book My Hotel

Please note that all fields followed by an asterisk must be filled in.
YES
NO
YES
NO

Please enter the word that you see below.

  



Uganda Currency

Ex-guide