Agaciro Fund gets govt shares to grow assets

Monday December 11 2017

President Paul Kagame (centre) at the launch of the Agaciro Fund in August 2012. 

President Paul Kagame (centre) at the launch of the Agaciro Fund in August 2012. The fund largely depends on contributions from the public and the private sector for its equity. PHOTO | CYRIL NDEGEYA | NATION 

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Government-owned shares in 20 private companies will be transferred to the Agaciro Development Fund, Rwanda’s sovereign wealth fund, to boost its assets.
The Agaciro Development Fund was set up in 2012 when donors suspended funding Rwanda’s development budget, and largely depends on contributions from the public and the private sector for its equity.

The fund’s grants dropped from Rwf5.6 billion ($6.6 million) between January and June 2016, to Rwf5 billion ($5.8 million) in the first half of this year. But continuous investing of the grants in high- return investments has helped the fund grow its equity over the years.

The fund’s assets and interest income grew by double digits in the first six months of this year. The assets hit $54.9 million between January and June, from the $41 million reported during the same period in 2016.

Agaciro Corporate Trust Ltd chief executive Jack Kayonga said, “We are excited because we want to become a fund of a significant size that will guarantee Rwandans the Rwanda they want.”

The government shares earmarked include those in BK Group Plc, a holding company of Bank of Kigali, BK General Insurance and BK TecHouse. These could be the first to be transferred in a process that is already at an advanced stage.

“The legal process of effecting the transfer is underway and will be submitted for shareholders’ consideration during the annual general meeting in May, 2018,” said Marc Holtzaman, chairman of the Bank of Kigali, at a shareholders extraordinary general meeting recently.

“I think this was the best decision for the growth of the bank,” added Mr Holtzaman.

The meeting also voted to have the bank raise more funds through a rights issue.

The government owns 198,534,600 shares in the Bank of Kigali, a 29.5 per cent shareholding that gives it a controlling stake. It is not clear whether shares of the Rwanda Social Security Board, a public pension fund that owns a 25.1 per cent stake in Bank of Kigali, will be also transferred to the fund.

The National Agricultural Export Board, which manages some tea and coffee companies in the country, owns 0.1 per cent of the Bank of Kigali while other shares are owned by retail and institutional investors.

Although the full list of the 20 private companies whose government shares have been targeted was not available by press time, Celestine Rwabukumba, the chief executive of the Rwanda Stock Exchange, said that the government’s 20 per cent shares in the Rwanda Stock Exchange are among those to be transferred to the Agaciro Fund, a process that could be completed next year.

Experts have welcomed the new capital injection and the consolidation of government shares in commercial investments, saying it will increase efficiency.

Rights issue

The Bank of Kigali shareholders’ extraordinary meeting, approved the board’s call to increase authorised share capital from $8.2 million to $12.3 million through a rights issue next year.

At least 348 million new shares are to be issued next year, to raise $100 million to finance the bank’s growth in the local market.

Although the bank’s core capital is still above the 15 per cent minimum level requirement by the central bank, chief executive Diane Karusi expressed fears that without a new capital injection, the lender will find it difficult to finance loans.

The banks nine-months financial report covering January to September, shows that its tier 1 capital has dropped significantly to 18.9 per cent, from 22.1 per cent recorded in 2015.
“The more we grow, the more capital we need. Our lending business has been eating up our capital,” said Ms Karusi.

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