Crown Paints, a paint manufacturing company in Kenya, has raised Ksh. 642.7 million from its pre-emptive rights issue. The amount is equivalent to 64.3 million more shares from an initially projected 81 million more shares for a combined Ksh. 809.6 million. The funds will be listed on the Nairobi Securities Exchange (NSE).
According to the company, the funds will secure its balance sheet strength to give it a competitive advantage in a competitive market and on the NSE.
“The total number of shares that were applied for under the Rights Issue was 80,959,470 against an offer of 71,181,000 shares,” Transaction Advisors Bob Karina, Chairman of Faida Investment Bank said.
Faida Investment Bank is the lead transaction adviser in the rights issue, while KCB acts as the receiving bank. Other companies involved in the rights issue are Anjarwalla and Khanna LLP, the legal advisor, and Ernst & Young LLP, the reporting accountant.
“This is a launchpad towards our goal of growing profitability, driving sustainable development and long-term equity value,” Crown Paint’s Group CEO, Dr. Rakesh Rao, said.
Crown Paints will also be able to invest in its subsidiaries which have hitherto made losses, diversify its product lines to meet changing customer needs, and enable the firm to reduce reliance on short-term debt.
Back in May 2021, the Capital Markets Authority (CMA) granted approval to Crown Paints to undertake a rights issue to raise Ksh. 711,810,000 by issuing and listing 71,181,000 new ordinary shares on the NSE. The rights were issued based on one new ordinary share for every one existing share.