TransCentury Cash Call Receives Boost from Share Price Surge

For the first time since the company’s cash call began on December 29, TransCentury Plc stock traded above the rights issue price on Friday, increasing the investment firm’s chances of raising Sh2 billion in fresh capital.

The share price of the company increased 8.65% to close at Sh1.13, above the rights issue offer, which is fixed at Sh1.1 per share.

Since it was more affordable to purchase shares on the open market in the past, the stock had previously traded below the cash call level, complicating the efforts to raise funds.

If the share price increase persists, it will increase the rights issue, which will increase the market price discount.

The price on Friday closed at Sh0.78, which is a 44.87 percent increase from the 52-week low price established on December 9 of 2022.

On Friday, investors purchased 104,100 shares of the corporation, which was one of the highest volumes since December 23, 2022, when 10 million units peaked in trading.

The cash call from TransCentury, which has a negative equity position of Sh9.07 billion as a result of multi-year losses, is putting investor confidence in the company to the test.

Kuramo Capital, the largest stakeholder of the company, has pledged to invest up to Sh1.1 billion in the rights issue. If successful, this move would increase Kuramo Capital’s ownership of the company to more than 48 percent.

Kuramo now owns 93.7 million shares or 25% of the infrastructure investment company.

As a result of the general drop in share prices at the Nairobi Securities Exchange, businesses have refrained from making the appropriate issues in recent years as a means of raising fresh cash.

In comparison to the 15 such corporate activities between 2010 and 2016, only Crown Paints launched a rights issue in 2021.

Companies in these rights offer to provide shareholders the option—but not the obligation—to purchase additional shares, typically at a discount to the going share price.