After buying Crane Bank, DFCU now planning rights issue

Thursday, March 16, 2017 — updated on February 23, 2023 - 4 min read

DFCU Banking Hall in Kampala. By February 28, the bank had concluded an agreement to borrow from one of its shareholders to raise its capitalisation by $50 million in order to qualify to be among the biggest lenders. PHOTO|FILE

It has been a few busy weeks for DFCU Ltd, whose wholly-owned subsidiary DFCU Bank bought Crane Bank on January 27, and its shareholders thereby increased capitalisation and are now planning a rights issue.

The EastAfrican has learnt that the DFCU board will soon meet to endorse a plan for a rights issue for its shareholders, pending regulatory approvals by the Capital Markets Authority and the Bank of Uganda.
The rights issue will be the third significant move by DFCU.

Stock’s activity
During this period, the only movement was on March 6 when the stock’s share price fell to Ush750 (US cents 20.8) before rebounding to Ush760 the next day.
Despite seeing little activity for some time, DFCU has previously posted good results and remains one of the most stable stocks on the USE. Its stock was trading at a healthy Ush1,200 (US cents 33.3) before it announced a share split a few years ago.
A rights issue is an issue of shares at a special price by a company to its existing shareholders, which entitles them to buy additional shares directly from the company in proportion to their existing share holding.
Details of the amount DFCU is hoping to raise from the rights issue are still a matter of speculation until the transaction documents are finalised, but capital markets observers say the lender could be targeting about $30 million.
They argue that for a bank that has taken over assets and liabilities of the former major lender Crane Bank, 23 of whose 46 branches DFCU closed after the deal, the group will be informed by the need to raise enough funds to clean up the Crane Bank mess, but also for DFCU to buttress its operational and capital requirements that the central bank demands.

After buying Crane Bank, DFCU now planning rights issue

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