By KABONA ESIARA

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Bank of Kigali investors have lost an estimated $7.5 million after its stock, trading on Rwanda bourse, shed 3.4 per cent of its value from December 2017 to November 8.

The market value of the bank has plummeted from Rwf195 billion ($218.5 million) to Rwf188.2 billion ($211.6 million), brought down by old shareholders selling their shares at lower prices to raise capital and increase their stakes in the Bank of Kigali rights issue.

Rwanda’s biggest lender by assets, profits and market share, the bank hopes to mobilise Rwf60 billion ($70 million) in a rights issue at the end of this month.

The capital raised will finance big card projects, boost its capital buffers and recapitalise its subsidiaries, which include BK Capital, BK General Insurance and BK TechHouse

As of Thursday last week, Bank of Kigali shares traded at Rwf280 ($0.31) apiece, a drop from the Rwf290 average in December 2017.

“Desperate shareholders seeking to expand their holding in the bank are selling their shares at low prices in order to raise capital to invest in the new discounted shares,” a stockbroker said.

The rights issue shares will cost Rwf270 ($0.31) each, a discount meant to encourage shareholders to increase their stake.

As a result, the Rwanda Stock Index went down by 0.27 points to 129.54 while the All Share Index plummeted by 1.94 points to 131.31 points, pulled down by Bank of Kigali shedding a 3.4 per cent from its share price.

Nothing has changed

Celestin Rwabukumba, chief executive of Rwanda Stock Exchange, however, said a 10 per cent drop in value would worry the market, shedding 3 per cent is still acceptable.

“The bank has not changes. The fundamentals remain the same,” said Mr Rwabukumba.

“Another reason is that our market is not as liquid as other markets so investors will start selling at discounted prices,” added Mr Rwabukumba.

The low liquidity at the Rwanda exchange, according to Bank of Kigali management, is part of the reason they cross-listed the shares will not be taken up during the rights issue on the Nairobi Securities Exchange.

Diane Karusisi, chief executive of Bank of Kigali, described NSE as “deeper and with more investors,” as she seeks to bolster the banks capital from $140 million to $210 million, a capital level which positions the lender to book more business in a competitive banking environment.

The lender will issue 222 million new shares to its shareholders at a ratio of one for every three held, according to Renaissance Capital Rwanda, the lead transaction advisor.