TransCentury Gets Relief in Take-over Bid

Investment firm TransCentury has received a nod from the Capital Markets Authority (CMA) exempting its majority shareholders from initiating any potential takeover amid attempts to raise capital through a rights issue.

The exemption stands despite the majority shareholder, Kuramo Capital, having the option to acquire additional stakes beyond their current share allocation, in the event of untaken shares by other shareholders.

“The company is pleased to announce that on 27th April 2022 the CMA granted the request for the takeover exemption thereby allowing the major shareholder to acquire shares beyond their pro rata allocation should the shares be available during the Rights issue,” TransCentury secretary Virginia Ndunge said in a notice.

Increasing shareholding in a company always gives the shareowners an upper hand during mergers and acquisitions of companies.

Last month, the loss-making firm sought to raise over Sh2.06 billion through rights issues after settling for an offer price of Sh1.10 per unit, which is now higher than the Sh0.87 per share prevailing trading price at the Nairobi Securities Exchange (NSE) on Tuesday this week.

The listed firm has private equity firm Kuramo Capital as an anchor shareholder with a 25 per cent stake, while the remaining ownership is distributed among an estimated 1800 holders, comprising individual and institutional investors.

Kuramo has already indicated that it does not intend to initiate a take-over offer as part of any additional share they acquire beyond the existing 25 per cent stake.

Cash-strapped companies can turn to rights issues to raise capital by allowing existing shareholders to purchase new shares at a discount compared to the market trading price.

The firm’s stock price has been shedding off in recent weeks, with its current stock now retailing at a lower price than the previously discounted price offered.

This means TransCentury might struggle to hit the Sh2.06 billion capital target since investors have the option of cheaper open market prices offered at the Nairobi bourse.