DTB gears up for rights issue to drive regional expansion

Diamond Trust Bank shareholders on Friday approved plans to raise an additional Sh1.8 billion through a rights issue to finance local and regional expansion plans.

The bank, which has operations in Kenya, Tanzania and Burundi, is to offer 24.5 million ordinary shares to shareholders in a process that is set to start next month.

Speaking during the institution’s Annual General Meeting in Nairobi, DTB’s Group chairman, Mr Abdul Samji, said the bank is positioning itself to grow to a tier-one financial institution through its expansion programme in the region and the sub-Saharan Africa.

The rights issue will raise part of the capital needed to fast track this drive.

“Depending on the price, we are looking to raise between Sh1.7 billion to Sh1.8 billion. As soon as the Capital Markets Authority approves our proposal, we hope to begin the cash call sometimes in June this year,” Mr Samji said.

Shareholders would be offered one new ordinary share for every eight ordinary shares held. The rights issue will be the third to be issued after previous ones in 2006 and 2007 were oversubscribed.

Challenge

Despite the current challenges in the economy, the bank is optimistic that the rights issue would be fully subscribed.

The bank is also looking to expand its branch network in Kenya to 41 by opening five additional branches. It also plans to rollout agency banking service this year, as well as start operations in Rwanda.

“This financial year is going to be challenging given the prevailing conditions in the economy, but our expansion plans are still on course,” Mr Samji said. 

DTB, which posted a 21 per cent rise in after-tax profit to Sh2.99 billion in 2011 up from Sh2.48 billion in 2010, is also planning to expand to expand to South Sudan, the Democratic Republic of Congo and Mozambique by 2020.