Business
World Bank’s investment arm buys a 7.4% stake in Kenya Airways
The World Bank investing arm, the International Financing Corporation (IFC), will own 7.4 percent of Kenya Airways after conclusion of a rights issue through which it is expected to buy 143 million shares of Kenya’s national carrier.
The corporation, which did not own Kenya Airways shares prior to the rights issue, bought 2.5 million rights from shareholders who forfeited their portion in the ongoing cash call.
The purchase entitled IFC to apply for another 140.5 million shares in line with Kenya Airways rights issue guidelines.
The full uptake of the shares will see IFC own about 7.4 percent of the 1.9 billion Kenya Airways shares that will have been issued at the conclusion of the current share sale.
“They (IFC) already bought 2.5 million rights during the trading period. That then allows them to buy additional shares,” said Kenya Airways in an e-mail response to the Business Daily newspaper in Nairobi (the Kenyan capital).
Irrevocable commitments
As a reputable international financier, IFC’s entry into Kenya Airways’ shareholding register will boost investor confidence in future prospects of the airline, and make it easier for the airline to raise debt capital.
The IFC has committed to take up US$25 million worth of shares in the issue and had approved an additional US$80 million in debt to fund Kenya Airways’ expansion plans.
Kenya Airways is also targeting US$2.2 billion from banks over the next five years to buy new planes and support its expansion plan.
The airline had on Tuesday sent a statement that said: “Among the key non-shareholders who bought its rights is the International Finance Corporation, which acquired 2.5 million rights and subsequently applied for 140.5 million additional shares.”
The Kenya government, which owns 23 percent of Kenya Airways shares, and Dutch airline KLM, which has a 26 percent stake, have already given irrevocable commitments to take their full rights.
This would mean that IFC’s purchase, which is equivalent to 10 percent of the 1.4 billion shares on offer, will raise the guaranteed uptake to 59 percent of the US$250 million cash call.
The transaction arrangers have set a minimum target of 70 percent uptake to consider the share sale a success.
Results of the rights offer, which closes on Friday, will be made public on May 30.
Source: Africa Review