Kampala bourse listed National Insurance Corporation (NIC) has submitted an application to Uganda’s capital markets regulators for the approval of a planned rights issue, a move the could make it the first to raise funds under the system where shares are deposited and trades facilitated through a central depository.
NIC first announced that it was planning a rights issue in November last year and disclosures contained in its December 2011 annual report show that shareholders had approved the increase of its authorized share capital and paid up share capital, paving way for the rights issue.
The insurance firm said that it has submitted the application to Uganda’s Capital Markets Authority and the Uganda Securities Exchange (USE) an indication that the rights issue could occur before the end of this year.
“The company is going to use the new capital to expand our business and in the process increase its turnover and market share. We want to get ourselves prepared to be able to take advantage of the emerging opportunities in the oil and energy sector. The injected capital will also allow us increase our retention capacity and thereby underwrite bigger risks,” said Folayan Bayo, managing director, NIC in a statement.
In 2011, shareholders of the insurance firm approved the increase of its authorized share capital to Ush10 billion ($4 million) from Ush3 billion ($1.2 million) and it’s paid up share capital to Ush7 billion ($2.8 million) from Ush2.01 billion ($809,379) but gave no details on how many shares will be offered to existing shareholders and at what price.
Mr Bayo said that the company plans to increase its branch network, build its investment portfolio and embarking on improvement and redevelopment of its real estate holdings.
NIC’s stock at the USE last traded at Ush35 ($0.01), the same price at which it closed the end of last year.
“The reported net asset value per share of NIC is Ush65 ($0.03). The existing shareholders will be presented an opportunity to increase their shareholding while new investors will be able to participate in the growth of a large company in the insurance industry,” said Robert Baldwin, chief executive officer, Crested Stocks & Securities.
Crested Stocks & Securities is the co-lead transaction advisor and lead sponsoring stockbroker with Kenya’s Standard Investment Bank for the proposed rights issue.