Co-op Bank IPO nets Sh4.7bn

The Co-operative Bank of Kenya initial public offering has raked in Sh4.7 billion, interim results released on Tuesday.

However, the final tally from brokers and selling agents is yet to be completed.

The 40-year-old bank has now qualified for listing after exceeding the 30 per cent success rate requirement.

Analysts were expecting a lower success rate for the IPO, which came in the middle of a bear run at the Nairobi Stock Exchange made worse by a global economic meltdown.

Retain profit

The IPO, apart from listing 701 million shares at the bourse, sought Sh6.7 billion for expansion of the bank.

Co-op Bank will now retain Sh2 billion of its profit this year to meet the capitalisation gap.

This, in addition to the IPO’s collection and its existing Sh6.8 billion capital, will add up to capitalisation of Sh13.5 billion making it one of the strongest banks in the country.

“We are pleased to note that the IPO with the Sh4.7 billion subscriptions so far, has received commendable subscription rate of over 70 per cent, notwithstanding the bear market and unprecedented hostile environment with the global crisis,” said managing director Gideon Muriuki in a statement.

Co-op Bank has been mulling over listing since 1997.

But it had to be shelve the idea after the bank’s headquarters was destroyed by the 1998 terrorist bombing.

It then slipped into loss making culminating in Sh2.3 billion loss and subsequent shake up of the management.

However, in the last few years its prospects have looked up with a profit of Sh2.3 billion realised last year.

It is targeting Sh3.4 billion profit at the end of the year.

Sheer faith

“Ours was a walk of sheer faith and determination,” said Mr Muriuki while thanking Kenyans for their goodwill.

Some brokers had urged the promoters of the IPO to postpone it, a move that was rejected by the bank’s board and transaction advisors, Dyer & Blair.

The bank wants to use the Sh6.7 billion in expanding its branch network, invest in ICT, roll out mortgage products and connect with Saccos.

Full allocation

Allocation results will be announced on December 16. However, it is expected that investors will get full allocation for their applications.

Shares of the bank will start trading at the exchange on December 22.

Co-op Bank IPO was the second this year after Safaricom IPO and is expected to close the year for IPOs.