Wazua
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KCB Rights
Rank: Elder Joined: 6/27/2008 Posts: 4,114
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GoK will not execute theirs. I wonder whether they will float them....I think the should. Would you buy the rights? At how much? ==== On a different point; why were they contemplating an over-subscription? How can you get an Over-subscription of rights? Aren't shareholders invited to buy only up to the qualified maximum (in this case 2 for every five)? If so, then what was that over-subscription? Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 9/25/2007 Posts: 96
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My take is that an oversubscription would occur if investors bid for the GoK's rights over and above their entitlement. This assumes that the GoK shall not be selling its rights.
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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Seems some investors are confused about what a rights issue is... The Governor of Nyeri - 2017
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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There is no way these rights will be oversubscribed. The last rights issue was also undersubscribed, and the quantum was smaller. Business opportunities are like buses,there's always another one coming
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Rank: Chief Joined: 1/3/2007 Posts: 18,124 Location: Nairobi
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100% Rights is only possible if they get a strategic investor interested... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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My understanding rights: Existing shareholders are invited to buy more shares depending on the number they currently have. In this case 2new for every 5 held. KCB has 2,217,777,777 shares therefore there are 887,111,110 rights on offer. In a rights issue, you cannot apply for more than your entitlement; unless you acquire some one elses entitlement. That's why the rights are put in the market. Since no one can apply more than their entitlement, then there cannot be an over-subscription. It has nothing to do with availability of capital in the market. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 5/8/2008 Posts: 77
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mukiha wrote:My understanding rights:
Existing shareholders are invited to buy more shares depending on the number they currently have. In this case 2new for every 5 held.
KCB has 2,217,777,777 shares therefore there are 887,111,110 rights on offer.
In a rights issue, you cannot apply for more than your entitlement; unless you acquire some one elses entitlement. That's why the rights are put in the market.
Since no one can apply more than their entitlement, then there cannot be an over-subscription.
It has nothing to do with availability of capital in the market. From past experience, you can get more than your entitlement. In past rights issues, i have applied for my entitlement, plus additional entitlements directly and got allocated more shares. I guess these are for investors not interested at all in the rights, or who fail for whatever reason to sell their rights, allowing them to expire. Many persons acting like me can lead to an over subscription (asking for more rights, than are on offer).
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Rank: Chief Joined: 1/3/2007 Posts: 18,124 Location: Nairobi
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mukiha wrote:My understanding rights:
Existing shareholders are invited to buy more shares depending on the number they currently have. In this case 2new for every 5 held.
KCB has 2,217,777,777 shares therefore there are 887,111,110 rights on offer.
In a rights issue, you cannot apply for more than your entitlement; unless you acquire some one elses entitlement. That's why the rights are put in the market.
Since no one can apply more than their entitlement, then there cannot be an over-subscription.
It has nothing to do with availability of capital in the market. Mistaken, you are, Mukiha... Lesson, need to learn on Rights Issues, you do... Apply, one can, for more than Rights allocated to oneself. Look at Rights Application, section provided for additional shares above & beyond allocated Rights, there is... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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Mukiha-theoritically you are right, but in practice, every elegible shareholder is encouraged to in effect bid for more than their share of rights. 2ndly, other investors are allowed to bid for the rights during the "rights trading period". And that is how you end with o/subscription or u/subscription. Kapeesh? The Governor of Nyeri - 2017
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@mukiha, from my understanding, all the rights belong to shareholders. However, several courses of action can take place for existing shareholder, who may choose:
1. to take up all their rights.
2. to take up some and sell the rest to a new investor.
3. to take up all and apply for additional unalloted rights from KCB.
4. to sell all their rights to a new investor. New investor would take up all the acquired rights and when doing so, have an option to apply for additional unalloted rights from KCB.
5. to do nothing leaving KCB will unalloted rights, available for whomever applies for more than their allotment.
Note: In the process of applying for additional rights, people may apply for more than is available, hence the 'oversubscription'.
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Rank: Member Joined: 8/14/2009 Posts: 244
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@mukiha@wa_ithaka
I have 5000 shares, meaning i have rights to 2000 shares. sometiomes people have no money to pay for their rights and some may not be aware that they can be traded. For me who wants to accumulate, I will apply for 4000 which i may be allocated if full or in part. my assured rights are 2000. many rights issues get ovesubcsribed by such bidder behavior. for kcb, i have my doubts, particularly if gok does not pick its rights.
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Rank: Member Joined: 3/24/2010 Posts: 101 Location: Nairobi
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stock.enigma wrote:@mukiha@wa_ithaka
many rights issues get ovesubcsribed by such bidder behavior. for kcb, i have my doubts, particularly if gok does not pick its rights. I think the challenge with the KCB is that the share price, now at around 18 show that there price might fall below 17 post rights...so someone like me, i will take my rights, maybe cautiously apply for addition, depending on how the share performs or wait post right...so this might end up making investors not applying 4 addition shares in numbers!!
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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Wake me up when its 12 bob...i will be so so so eager to buy from u...
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Rank: Chief Joined: 1/3/2007 Posts: 18,124 Location: Nairobi
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@the deal - 12/- is unlikely but I do see 15/- as a possibility... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 3/24/2010 Posts: 101 Location: Nairobi
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the deal wrote:Wake me up when its 12 bob...i will be so so so eager to buy from u... @the deal HaHaaaaha buying from me at 12 bob is a pipe dream...cos i will be buying more. Benjamin Graham advises me that I should not buy any share that I will sell when the price goes down...instead i should buy more when the price goes down...that's the gospel man..
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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astute wrote:the deal wrote:Wake me up when its 12 bob...i will be so so so eager to buy from u... @the deal HaHaaaaha buying from me at 12 bob is a pipe dream...cos i will be buying more. Benjamin Graham advises me that I should not buy any share that I will sell when the price goes down...instead i should buy more when the price goes down...that's the gospel man.. Yeaaah thats the gospel but how many people know that...GoK has given KCB a Red Card...so GoK will be selling rights to raise more money to support the 1 trillion budget...unless guys with big pockets come in to support the ship...people will panic...@ 18.45 bob how much of a discount are u getting? Unless KCB managmnt come up with 20 something % growth in half year PAT...my 12 bob will a good deal...
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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After much consideration and having sold half of my portfolio in KCB I have decided to buy into the rights issue for the simple reason I have no other investment option. T-bills at 2.78% and a bank offering 4.5% on fixed deposit,I would rather enjoy the KCB dividends. Plus looking at the KCB balance sheet there is just too much liquid cash so there's room for good growth in lending. The last rights issue was used to open branches and buy the software but this rights issue looks like the one in 2004 where i bought at 50/- averaged down at 35/- and watched as the price moved to 200/- before the split. Am willing to wait 3 years to recover the capital so I will buy
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Rank: Member Joined: 8/14/2009 Posts: 244
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VituVingiSana wrote:@the deal - 12/- is unlikely but I do see 15/- as a possibility... The stock will possibly hit a low of 15/= for a day but this will raise the demand. I see the close price on the same day it hits the low, improving to the rights issue price. Eventually, the price will settle on the 18-19/= range for a while. My advise: take your rights.
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Rank: Member Joined: 8/14/2009 Posts: 244
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I have just received the info memo. It concludes:'so we are running a very vibrant business that can only grow further if it has adequate capital and the operating environment remains favorable'.
The stats over the last five years, that is btw 2005 and 2009 are as follows: PBT up 323% from 1.95b to 6.5b. Net loans and advances was up 333% from 36b to 120b. Deposits were up 253% from 64b to 162b.
The additional funds are to support the bank's growth plans over the coming years and strngthen the capital base. The increased capital will enable the bank to book long term assets, such as loans for housing, and property development.
Watu wajisomee na wajichagulie
I wasn't a fun of the counter until i went to rwanda, in the western part bordering DRC, a village called Kisenyi. There, the lion is roaring.
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Rank: Elder Joined: 7/22/2009 Posts: 7,460
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stock.enigma wrote:.......The stock will possibly hit a low of 15/= for a day....... My advise: take your rights. Then why take up the rights? By simply avoiding them and picking up the shares at 15/= you are guaranteed 13% gain by the time the share is back at the rights price! What I'm I missing here? Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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