Kampala bourse listed National Insurance Corporation (NIC) will be seeking to raise Ush8.4 billion ($3.3 million) through a cash call that is set to begin in the next two weeks.

The funds sought through the rights issue will be used to fund its expansion plans, upgrade its information technology systems across the branches, help the company increase its retention capacity and by extension allow it to underwrite bigger risks.

NIC has said that the funds will be raised through the sale of additional shares to existing shareholders from November 22 through December 13.

“The size of the rights issue is Ush8.4 billion ($3.3 million) and the rights issue price is Ush26 ($0.10) per new share,” said Remi Olowude, NIC’s chairman in a statement.

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The shares are being offered at a 25.71 per cent discount to its last traded price of Ush35 ($0.01) at the Uganda Securities Exchange (USE), which is the same price at which it closed the end of last year.

Investors will get 4 new shares for 5 existing shares and the register closure date for those who want to participate in the cash call is November 15.

NIC is 60 per cent owned by Industrial and General Insurance Company Limited (IGI) of Nigeria through Corporate Holdings Limited while the rest is held by the public.

Crane Bank held 10.331 per cent or 41.72 million shares of the company according to NIC’s annual report for the period ended December 2012 while the single largest individual shareholder at the time was Sudhir Ruparelia who held 10.272 per cent or 41.48 million shares.

“The largest shareholder with 60 per cent has indicated participation,” said Robert Baldwin, chief executive officer, Crested Stocks and Securities, the co-lead transaction advisor and lead sponsoring stockbroker along with Kenya’s Standard Investment Bank for the rights issue.

READ: Uganda's NIC seeks approval for rights issue

At the beginning of September, the insurance firm submitted the application to Uganda’s Capital Markets Authority and the USE.

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.

“This is the first rights issue in a fully electronic environment,” said Amish Gupta, an Associate director at Standard Investment Bank.