Forex - Kingdom Financial Holdings Limited has raised US$2,5 million fresh capital through a rights offer, which was subscribed by 55,6 percent. The diversified financial institution was seeking to raise US$4,5 million to recapitalise its banking arm, after it was given a special dispensation by the Reserve Bank of Zimbabwe to comply with minimum capital requirements by February 2012. KFHL also expects to deploy some of the capital to fund organic and acquisitive growth in its core business segments. The rights issue did not have an underwriter. An underwriter guarantees that the funds being sought by the company will be raised and shareholders that fail to follow their rights would loose their shares to the underwriter.

"We are delighted with the response both institutional and individual investors supported the rights issue and we thank them for their support," KFHL said in a statement.

Concurrent with the rights issue, KFHL is raising additional capital through a private placement of shares to investors, with whom negotiations have already begun.

According to the recapitalisation model, US$4,5 million was supposed to come through a rights issue, US$7,5 million through a private placement and US$3 million through a public offering.

Kingdom is also seeking to raise an additional US$10 million through the issuing of 6 640 106 redeemable convertible preference shares at US$1,506 per share.

It is understood that the national average subscription for rights issues, since dollarisation stands at 49 percent and for the banking sector, the average subscription is 48 percent, slightly below the total national average.

KFHL has been profitable during the past two years over which the multiple currency system has been in place and has discounted its undercapitalisation through innovative products and a strong brand.

The group's half-year financial results for the period ended June 30 2011 show attributable profits of US$2,34 million on shareholder's equity of US$21,8 million to give a half-year return on equity of 10,7 percent.

With total deposits of US$148,4 million at mid-year, Kingdom Bank commanded a market share of about 5 percent. Kingdom says based on solid financial performance the rights issue is above average subscription at 55, 6 percent.

The private placement and the offer of redeemable convertible preference shares closes on November 30 2011, paving the way for the group's capitalisation.

KFHL has plans to list on both the Zimbabwe Stock Exchange and the Johannesburg Stock Exchange by the first half of next year. Kingdom has been battling to recapitalise its operations after former partner, Meikles Limited withdrew its deposit of US$11,5 million.

As at June 30, 2011 the bank was capitalised to the tune of US$2,7 million, instead of the expected US$12,5 million.

Bright Madera

The Herald/19/10/2011