CMA Blocks Mumias Sugar Bid to Raise Capital Through Rights Issue

The Kenyan equities market was characterized by varied movements as depicted by the indices and the value of transactions. The benchmark indicator, NSE-20 share index, recorded a 0.84% loss to close at 3925.32 points. The NSE All-Share Index fell by 0.65% to perch at 144.72 points while the NSE 25 Share Index lost ground by 0.91% to close at 4152.81 points. Value traded closed on a positive note of KES 0.422 billion, having appreciated by 28.47%. Market capitalization contracted by 0.65% to close at KES 2,039.89 billion from KES 2,053.29 billion. Market breadth, exhibited a slight improvement as the number of stocks that advanced -18 were at par with the number of stocks that declined -18.

The Capital Markets Authority blocked a bid by Mumias Sugar Company (NSE: MSC) to raise KES 4 billion through a rights issue, until an audit of the company’s finances is conducted. The independent audit was to determine whether the company’s financial statements were a true reflection of its status, and if the company was being run properly. The treasury, which owns a 20% shareholding in the company, did not allocate money for the rights issue in the next budget (2016/2017).

The company is however looking for other funding options, as the current market conditions are not attractive for capital raising. On the other hand, the share value has been extremely eroded making it difficult for discounting.

Equity Market Highlights

Equity Group Holdings Ltd (NSE: EQTY) was the most actively traded stock today accounting for 42.92% of the total market value traded activity. KCB Group Ltd (NSE: KCB) also registered stout levels of activity, accounting for 31.93% of the total market turnover. E.A. Cables Ltd (NSE: CABL) emerged as the top gainer of the day climbing up by 6.38% to close at KES 7.50. Longhorn Publishers Ltd (NSE: LKL) was the day’s second biggest gainer, edging up by 4.90%, to close the day at KES 5.35, as the book closure date draws near.

Eveready East Africa Ltd (NSE: EVRD) was the top loser, declining by 6.78% to close at KES 2.75. Atlas African Industries Ltd (NSE: ADSS) came in second, cutting back 6.25% to close at KES 1.50.

Article by Genghis Research.