CFX Financial Services has increased the amount it intends to raise from its upcoming rights issue by 80% to cover other projects apart from the minimum
capital requirements set by the central bank, businessdigest can reveal.
Sources said the bank now plans to raise $1,8 trillion instead of the $1 trillion that it announced in a statement last Friday.
This will make it the biggest fund raising exercise in the banking sector after the one undertaken by Kingdom Financial Holdings in June to raise $1,5 trillion.
Businessdigest revealed two weeks ago that the CFX board had agreed to raise $1,5 trillion.
A company statement published last Friday said an extraordinary general meeting would be held on September 1 to approve the rights issue, although the amount had not yet been revised upwards.
A senior executive told businessdigest yesterday that that bank will however seek to raise $1,8 trillion to cover other projects that were in the pipeline.
“Initially we had agreed to raise $1 trillion but we have since decided to go all the way and raise $1,8 trillion because we felt we will need the extra amount for other projects that we are planning,” said the executive.
CFX has since appointed potential suitor Zimre Holdings to underwrite the rights issue.
The move is likely to give Zimre — an institutional investor of note on the local bourse — a foothold in the banking group.
Zimre is expected to snap up shares not taken up by shareholders during the rights issue.
Businessdigest estimates that the rights issue could be undersubscribed by at least 20%.
The government, which controls 15,9% of CFX through its Allied Financial Services (AFS), is unlikely to follow its rights due to serious financial problems. Government is battling to raise cash to recapitalise other financial institutions in which it had significant stakes. CFX depositors who converted their deposits into cash earlier this year control, 39,1% of CFX. Not all of them are likely to follow their rights.