KQ upbeat over the success of rights issue

Kenya Airways is confident that its rights issue will be successful, despite its listed share price dipping to below its offer price of Sh14, at the close of trading last Friday.

Mr Alex Mbugua, Kenya Airways group finance director, said that in the medium and long-term, the share price of the company will rise due to the strong fundamentals of the company and aggressive growth plans.

He added that the dip in the listed share price which closed at Sh13.95 last Thursday will not last, given that the volume of shares traded at that price were very thin.

In addition, he said, the company is putting into the market 1.47 billion shares at Sh14, as opposed to the 462 million that are already there; hence, making it difficult for any investor to lay their hands on a sizeable chunk at a lower price.

According to Mr Mbugua, only four million out of the company’s 462 million shares have been traded since the rights issue was announced on March 19, with three million of those being traded by a single investor from South Africa.

This, he adds, leads to a false perception that the share price is falling, yet a large majority of shareholders are confident in the stock and are holding on to it, possibly to take up their rights in the issue.

He says the decision by some investors to sell at the lower price may have been informed by their realization that they do not have enough funds to take up their rights, but cautioned that it does not make economic sense.