I&M Bank to raise Rwf8bn by rights issue

I&M Bank Rwanda has announced that it will sell new ordinary shares to existing shareholders in a bid to raise at least Rwf8 billion as part of the plan to capitalize the lender’s operations. The bank will start the process of selling 202 million new shares to its existing shareholders next week on September 22 in a move aimed to raise new equity capital for the institution. The bank’s existing shareholders whose shares will trade until September 18, will be eligible to apply for the new shares at a share price of Rwf39.60 in the ratio of one share to every five old shares held. That’s a discount of 13.91 per cent to the stock’s last traded price of Rwf46. The decision for the rights issue was first agreed upon by the bank’s shareholders during their Annual General Meeting on June 22 this year, which was held virtually. The meeting at the time approved a recommendation by the board to issue further capital to meet the growing level of operations as well as maintain key ratios specified by the financial sector regulator. The AGM had proposed raising up to Rwf10 billion but after conducting all due diligence the bank decided to raise Rwf8 billion, according to an official who’s not authorized to speak on behalf of the company. The goal, he said, is to weather the impact of the Covid-19 pandemic on the bank and bank’s clients. “The bank also wants to invest in technology because we have realized that banks that are well-placed to serve are those that have injected money in technology,” he told The New Times. The source indicated that I&M wants to respond to the rising demand for loans from big companies and clients that are running big ticket projects across different industries. “Raising more equity capital will, therefore, respond to demand from big clients.” I&M Bank’s net interest income – difference between the interest income a bank earns from its lending activities and the interest it pays to depositors – grew by 8 per cent to Rwf11.3 billion as of June this year. Total assets grew by 13 per cent to Rwf357.9 billion. However, the Bank’s net profit (profit after tax) dipped 14.4 per cent from Rwf2.5 billion during the same period. According to I&M shareholding structure, BCR Investment Company currently owns a majority stake in the bank – some 54.47 per cent – followed by AfricInvest Evergreen Investments with 24.76 per cent. The public has 19.62 per cent stake, the bank’s employees (employee share ownership) control 0.99 per cent, and individual Investors have a 0.17 per cent shareholding. Anita Umulisa, the Bank’s Chief Financial Officer had said that among the reasons necessitating raising further capital was to support continued business expansion. In recent months, the bank’s business lines have been expanding steadily with its loan book expanding by 17 per cent to Rwf201 billion in the first quarter of 2020. Umulisa said that additional capital would support plans for expansion and maximization of digital platforms which is an emerging trend in the local financial scene. The capital is also expected to give the bank liquidity to service the market as the economy recovers from the outbreak. Meanwhile, the rights issue will open on September 25 and close on October 16, while announcement of results is slated for October 23. Listing of new shares on the Rwanda Stock Exchange from where the bank has been trading since 2017 will commence on October 30.

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I&M Bank to raise Rwf8bn by rights issue