CRDB share rallies ahead of right offer

Dar es Salaam Stock Exchange (DSE) has positively received CRDB Bank right offer pushing its share price up by 1.2 per cent in a week to 420/- up from 415/-, after shareholders approved the issue.

Tanzania Securities Weekly Commentary shows that bank counter accounted for 36 per cent of the total turnover and 99 per cent of the week’s volume that ended last Friday.

The brokerage firm data show that week-on-week turnover shot up to 33.58bn/- or a gain of 238 per cent higher compared to 9.94bn/- recorded the previous week.

“The week’s increase in turnover and volume was mainly supported by CRDB counter,” Tanzania Securities says, “shares traded also increased significantly.”

The bank counter was the most active counter on the banking segment, transacted over 28 million shares to close the week at 420/- per share.

Zan Securities Chief Executive Officer, Mr Raphael Masumbuko, said the right issue has a positive correlation with the share rallying of CRDB at the bourse.

“Investors know that right issue sell at discount and want to either increase their chances of getting more discount shares or selling to get high gain as demand is high,” Mr Masumbuko told ‘Daily News.’

The CEO anticipates more activities at CRDB counter this week as demand is on higher side. The right issue staged to offer one share per every five at a discount of 22 per cent to bring the price at 350/-.

The ‘Daily News’ quick calculation shows taking last Friday 420/- as a base price, meaning five times 420/- plus 350/- then dividing by six, bring the share price at 408/-.

This shows that selling at 420/-, a shareholder gains a 12/- on every share ahead of right offer. However, the right issue is backed by an underwriter or strategic investor who will buy all remaining shares which current holder failed to buy during the offer at 382/- a share.

This means that a shareholder will receive 32/- a share even if failed to participate in right issue.

Last Friday, the bank’s AGM agreed passed the resolution of right issue but eligible investors who have the right of extra one share will be determined based on shareholders’ register book closing at a later specified date once getting approval from regulators.

The rights offer is figured-out to be conducted in June after receiving blessing from relevant authorities -- DSE and CMSA.
Source: Daily News, reported by Abduel Elinaza, from Dar es Salaam, Tanzania
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