ABCH US$50m rights offer gets nod

PAN African banking group ABC Holdings has received the support of shareholders and the Botswana Stock Exchange (BSE) to launch a Rights Offer aimed at raising US$50 million to fund the group’s expansion of its retail network in selected markets, CEO Douglas Munatsi said.
The Rights Offer will see an additional 83 333 333 ordinary shares valued at  about 356,67 million Botswana Pula (BWP), or US$50 million, being offered to existing shareholders.
The funds raised will enable ABC Holdings Ltd to continue its strategic rollout of retail branches which began in 2009 and has seen BancABC open 53 branches to-date, aiming at ending the year with a total of 72 branches across its regional footprint.
Munatsi said the bank had been able to fund this expansion from internal resources. However, in order to build on the significant success that had been achieved to date, additional capital needed to be injected into the business.
“Hence the rights issue, which is intended to enable our existing shareholder base to follow their rights and participate in BancABC’s future growth. The funds received from the Rights Offer will be spread across all the markets in which the bank is active to increase our presence and market penetration,” said Munatsi.
“It is intended that the two major portions will go to Botswana and Zimbabwe which will get US$15 million each, whilst Tanzania and Zambia will be allocated US$7 million each and Mozambique will get US$ 3,5 million.”
The Rights Offer is being underwritten by ADC Financial Services and Corporate Development Limited.
ADC is already a significant shareholder of ABC Holdings, having a 23,4% stake.
BSE has given a preliminary waiver of the requirement to make a mandatory offer to minority shareholders in the event that ADC’s shareholding increases to 35% or more. In terms of the BSE Listing requirements, if any person, including an existing shareholder, acquires 35% or more of the ordinary issued shares of a listed company, that person is obliged to make an offer to the rest of the other “minority” shareholders at the same price that they have accumulated the 35% stake.
ABCH had sought a waiver from the BSE, which was granted after a special dispensation was obtained through a special resolution of ordinary shareholders at the general meeting which was held on May 30 2012.
A major shareholder — African Development Corporation — which has a 23,20% stake in the group, is underwriting the issue and will therefore follow its rights in the transaction.  This means that ADC will be taking up any shares not subscribed to by existing shareholders at the close of the rights offer, potentially taking its holding beyond the threshold 35%.
Should this happen, ADC would have been obliged to make an offer to all other shareholders of ABCH to acquire all the shares held by them at the rights offer price.
The price of the available shares has been set at BWP4,28 or US$0,60 per share, with the offer price being based on the average quoted trading price per share during the last three months. The Rights Offer will open on July 2 and close on July 27. Shareholders will be entitled to subscribe for the new shares at a ratio of one Rights Offer share for every 1.79 shares held as at the record date of May 30 2012.
The new shares will rank equal to the existing issued ordinary shares, offering holders full participation in distributed profits and capital. They will also rank equally to existing ordinary shares with regard to voting.
Munatsi said that in the last few years, the group has made a substantial investment in the required systems, people and distribution channels required to expand its offerings and moved aggressively into providing banking services for all including the SME segment of the market. — Staff Writer