Kenya Electricity Generating Co., the country’s biggest power producer, will more than quadruple its shares in issue with a $1.65 billion rights offer to fund an expansion program, acting Managing Director Simon Ngure said.

The state-controlled company, based in Nairobi, plans to increase the number of outstanding shares to 10 billion from 2.2 billion once it gets the go-ahead from the government, Ngure said, detailing for the first time the number of shares to be issued. KenGen, as the company is known, said last month it will raise $5.5 billion through a mix of 70 percent debt and 30 percent equity to finance a tripling in electricity output to 3,379 megawatts.

“Once we receive government approval for that, then we will do a rights issue to bring in about $1.65 billion in equity,” Ngure said in an interview on Nov. 6. KenGen will also take on about $3.85 billion of debt, he said.

Kenya plans to spend as much as $15 billion over the next 40 months to increase power output by more than 5,000 megawatts and help accelerate growth in East Africa’s biggest economy, Energy Minister Davis Chirchir said last week. Most of the power, which will add to existing capacity of 1,700 megawatts, will be produced from coal, gas and geothermal sources, he said.

KenGen will probably issue the new shares in stages to enable the domestic market to absorb the offering, said Kuria Kamau, an analyst at Nairobi-based Kestrel Capital (East Africa) Ltd. A once-off sale to raise $1.65 billion (141 billion shillings) would dwarf the 20.7 billion shillings that Kenya Airways sought last year in the biggest single offering of stock to existing shareholders by a Kenyan company.

Phased Approach
“I don’t think it is something they will do in one go, they may do it in phases over time like Kenya Commercial Bank,” Kamau said in a phone interview. Kenya Commercial Bank Ltd. raised 20 billion shillings in three rights offers in 2004, 2008 and 2010.

AngloGold Ashanti Ltd., the world’s third-biggest gold producer, carried out the continent’s largest rights offer since at least 2000 when it raised 13.5 billion rand ($1.32 billion), according to data compiled by Bloomberg.

KenGen appointed transaction advisers including KPMG, Johannesburg-based Absa Capital Ltd., Nairobi-based Dyer & Blair Investment Bank Ltd. and Hamilton Harrison and Matthews in May as it prepares to seek regulatory approval for the rights offer, he said.

“We need to raise more equity now so that we can take on more debt,” Ngure said. “To do a proper rights issue we’ve got to add more authorized shares.”

The company plans to generate an additional 2,500 megawatts of electricity by 2017. It currently produces 1,239 megawatts. About 960 megawatts of the extra output will come from coal, 700 megawatts each from gas and geothermal sources, 120 megawatts from wind and 24 megawatts from hydropower, Ngure said.

KenGen’s shares have surged 91 percent this year and traded at 16.80 shillings by 11:52 a.m. in Nairobi. The FTSE NSE 25-Share Index has gained 38 percent over the same period.

http://www.bloomberg.com/news/2...ple-shares-in-issue.html

The energy sector regulator is set to issue its verdict on Kenya Power’s application for an increase in electricity tariffs, signalling a possible rise in power bills early next year.

The acting director-general for the Energy Regulatory Commission (ERC) Fredrick Nyang’ said in an interview Wednesday that review of the electricity distributor’s application will be concluded next month.

Kenya Power is seeking approval of a 21 per cent rise in fixed charge and power consumption tariffs.

“We will have a meeting in December where we will make and announce some final decisions. We have been having very intense consultations with the sector players over the issue,” said Dr Nyang’.

He said the firm’s increased investment requirements mean tariffs will have to be reviewed upwards if it is to remain a viable entity.

Dr Nyang’ also acknowledged that an upward tariff review may be necessitated by a need to give fair returns to investors, who are coming into the sector under a plan to ramp up production in the short term.
http://www.businessdaily...1/-/2vq63nz/-/index.html

Even General Electric are now here for a piece of the pie

I will quit kengen tomorrow

GoK must take up its full allocation to retain control of the sector. Watch the so called developed economies, all rolling back privatization of electricity utilities because investors were profit motivated and hiked tariffs to unmanageable levels.

The way i understood Ngure was that part of the equity will come from a mixture of options like joint venture like the mixed coal/gas plant that was to be a joint venture with 62 bids already received. The rights issue will much less than the 141 billion around 50%.

If you consider the peak demand went up 9.5% from 1236Mw to 1354Mw in year and that's before we roll out the standard gauge railway, the light railway for nairobi and the oil pipeline then Kengen has zero option it has to raise it's equity to take in more debt.

I would say invest with a long term prospect with a ten year horizon or more it will be rewarding in your old age.

@mwekez@ji; Seems the story (State to Raise Stake in Kengen and KPLC) is causing a rally in KENGEN share and rubbishes what the acting CEO Ngure had mentioned abt the rights issue.
KPLC is also appreciating

The recommendation about setting up by GIC and transferring treasury's holding in the various companies it has stakes in to GIC will most likely be implemented

I hope it does not go KQ way (once bitten, twice shy). For mid/long term investment, I’d only buy AFTER the rights issue. Reminds me of KQ - I bailed out too late (@ ~ 13) and I wish I exited soon after the rights issue was announced in 2011.