Dfcu Limited, the single shareholder of dfcu Bank, will this week on Thursday, seek the approval of shareholders to issue them more shares at discounted rates in order to raise capital.
Known as a rights issue, the dfcu board has placed this in the “Special Business” category for the 52nd Annual General Meeting (AGM) to be held at the Kampala Sheraton Hotel on Friday.
The shareholders will be expected to allow the director to “offer subscription the unissued shares of the company by way of a rights issue to shareholders on such terms and conditions at such times, price and proportions to current shareholding as the directors shall in their sole discretion decide.” This is disclosed in the 2017 dfcu shareholders booklet.
In January 2017, dfcu Bank acquired the assets and liabilities of Crane Bank, which meant that the bank needed additional funds to finance the acquisition and shore up the capital position of the bank. The capital position was enhanced to within Bank of Uganda (BoU) after dfcu’s majority shareholders secured a $50m bridging facility from Arise BV - a consortium of private equity firms that are among the biggest shareholders in dfcu, including Norfund, NorFinance, Rabobank and FMO. In April 2017, Arise BV announced that it Norfinance and Rabobank had transferred their 55 per cent interest in dfcu Limited to it, making it the single largest shareholder.
The details of the rights issue will be revealed at the AGM, including the amounts. Once approval from shareholders is secured, dfcu will then apply to the Capital Markets Authority and Uganda Securities Exchange for approval and the eventual listing of the rights issue shares.
Dfcu shares are currently trading at Shs760 per share.
With the rights issue, already existing shareholders will buy more shares at a discounted rate in order for the DFCU Limited raise money. For shareholders, they can buy the discounted shares and sell them at the actual market price once the offer period has expired.