KenGen Gets A Blow as Share Price Falls Below Rights Issue Price

Equities:
The market reversed to an upward trend during Tuesday’s trading session illustrated by an uptick in indices and improvement in trading levels displayed by the value of transactions. The NSE-20 Share Index extended by 0.52% to close at 3895.86 points whilst the NSE-25 Share Index, edged up marginally by 0.063% to perch at 4206.06 points. The Nairobi All Share Index (NASI) and market capitalization also rose, closing the day’s trading at 146.45 points and KES 2,064.25 billion, respectively. Equity turnover ran into the red, depreciating by 28.07% to close at KES 546.58 million.
KenGen Limited was hit with a heavy headwind following the issue of its rights worth KES 28.8 billion, after its share price fell below the cash call offer price of 6.55 on Monday. The dip in the listed power providers share price was mostly attributed to fears of share dilution if the offer was unsubscribed whilst market analysts expected the market to correct.
The drop in the share price dampens prospects for the rights offer as it has made the stock more attractive to investors in the open market, nonetheless, market sentiments point towards a bounce back in share price as the trend corrects in due course whilst prospects for KenGen look optimistic post the rights issue. The power company intends to use the cash raised from the issue for capital expenditure in geothermal and wind power generation.
Equity Market Highlights
East African Breweries Ltd (NSE: EABL) was the most actively traded stock today accounting for 60.95% of the total market value traded activity. Kenya Commercial Bank Ltd (NSE: KCB) also registered robust levels of activity, accounting for 14.61% of the total market turnover.
Standard Group Ltd (NSE: TCL) capped the gainers list, advancing by 7.65% to close the day at KES 28.00. Longhorn Publishers Ltd (NSE: LKL) surged by 4.17%, to close the day as the second best performer at KES 5.00.
Liberty Kenya Holdings Limited (NSE: CFCI) emerged as the top loser of the day, slumping by 9.97% to close at KES 14.45. Eaagads Ltd similarly lost 4.17% to close at KES 23.00.
Article by Genghis Research.
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