Diamond Trust to use rights issue funds to expand – AKFED

Diamond Trust to use rights issue funds to expand

By PHILIP NGUNJIRI
Special Correspondent

The funds raised in the Diamond Trust Bank Kenya rights issue on the Nairobi Stock Exchange last year will be used for the bank’s expansion and diversification strategy, especially in Uganda and Tanzania.

According to the bank’s chairman, Mahmood Manji, the extra funds are needed to maintain growth.

“It is extremely important that we inject more funds to enable us to grow, otherwise we remain stagnant,” he told The EastAfrican.

The rights issue received applications worth Ksh2.3 billion ($32.8
million), surpassing the target by Ksh1.53 billion ($21.8 million). It
was oversubscribed by 197 per cent.

The bank had offered some 15.5 million rights to shareholders at a
discounted price of Ksh50 (71 US cents), expecting to raise Ksh776 million ($11 million) on full subscription.

The rights issue saw the bank join Kenya Commercial Bank (KCB), Uchumi Supermarkets and CFC Bank, who raised money through similar means.

However, trading in Uchumi shares, which was suspended after it was put into receivership in June last year and all its branches closed.

The supermarket chain had raised Ksh1.2 billion ($17.1 million) to
finance its recovery strategy.

Uchumi has since reopened some of the stores.

Diamond Trust Bank started its expansion in 2003 by upgrading its nformation technology infrastructure. It has since branched out to ganda and Tanzania.

Currently, the bank has 11 branches across East Africa — four in
Tanzania, two of them unveiled last year; two in Uganda, one in
Zanzibar and five in Kenya.

Diamond’s rights issue came barely two weeks after the listing of
Eveready shares on the bourse.

The issue also brought Habib Bank Ltd (HBL) into Diamond Trust’s wnership.

HBL investment in Diamond Trust, Mr Manji said, will benefit the bank hrough its expertise in all areas of operations, particularly in
retail banking, trade finance and human resource training and development.

“HBL’s involvement in Diamond Trust will be a significant step forward n internationalising our existing regional operations,” he said.

The bank’s principal shareholder, the Aga Khan Fund for Economic development, took up all its rights through its subsidiary HBL. HBL perates in 26 countries across five continents.

According to Manji, the bank has already introduced new asset finance roducts such as the Shares Loan — to finance the purchase of shares n listed companies; and Floor Plan — to finance the purchase of motor ehicles.

“The new asset finance products we have introduced have significantly ontributed to our profitability,” said Mr Manji.

He added that the bank’s “Open Banking” concept had significantly boosted performance by attracting more retail deposits.

“Performance for the rest of the year looks promising, despite market ressures,” he said.

Source

Author: ismailimail

Independent, civil society media featuring Ismaili Muslim community, its achievements and humanitarian works.

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