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Ndegwa family gives up right to raise stake in NIC
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gesowan
#1 Posted : Wednesday, October 10, 2012 11:33:44 PM
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the deal
#2 Posted : Thursday, October 11, 2012 12:36:49 AM
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Location: Windhoek/Nairobbery
If you have an opportunity to raise money...raise money...this banks Loan To Deposit ratio stands at 86%...the bank has one of the weakest capital ratio's around...with the new prudential guidelines this bank could be raising capital again in the nxt 2 years... shareholders have to be content with a measly dividend & a dilutive yearly bonus lol
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gesowan
#3 Posted : Thursday, October 11, 2012 1:23:30 AM
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if wishes were not guided by law...why not just take the 7 billion and capitalize the bank as in issue them the extra shares they applied....this will be a refund galore and a loss to those who "tied" their money
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guru267
#4 Posted : Thursday, October 11, 2012 6:09:34 AM
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the deal wrote:
shareholders have to be content with a measly dividend & a dilutive yearly bonus lol


Think before you speak... How are bonus shares in ANYWAY dilutive to shareholders??
Mark 12:29
Deuteronomy 4:16
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guru267
#5 Posted : Thursday, October 11, 2012 6:13:45 AM
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VituVingiSana wrote:
The allocation has not been announced. I figure it will be in the newspapers tomorrow. I wonder if the Ndegwas used their clout to get 35%. I think the Ndegwas called Ndungu who called Githae who told Muthuara that let the brothers increase it to 35%. It's all in-house. Tuko Pamoja.


I think someone has to swallow all these words!! All People are trying to do business and all we can think is conspiracy Sad
Mark 12:29
Deuteronomy 4:16
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mkonomtupu
#6 Posted : Thursday, October 11, 2012 9:37:13 AM
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guru267 wrote:
VituVingiSana wrote:
The allocation has not been announced. I figure it will be in the newspapers tomorrow. I wonder if the Ndegwas used their clout to get 35%. I think the Ndegwas called Ndungu who called Githae who told Muthuara that let the brothers increase it to 35%. It's all in-house. Tuko Pamoja.


I think someone has to swallow all these words!! All People are trying to do business and all we can think is conspiracy Sad



I agree @guru, all the Ndegwas were trying is to ensure is ensure there was full subscription. They have built a great brand and it's their ethical conduct of business that gives the small shareholders confidence to throw cash at the company. Anyway just wondering might the brothers have pepped in here and saw the ruckus raised here and decided not to participate in the untaken rights???
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King G
#7 Posted : Thursday, October 11, 2012 9:51:47 AM
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Once on a while it is good to throw tantrums with our small monies.

Good they have listened to the cries of the small shareloders, me included!
Thieves
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the deal
#8 Posted : Thursday, October 11, 2012 10:34:15 AM
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Location: Windhoek/Nairobbery
guru267 wrote:
the deal wrote:
shareholders have to be content with a measly dividend & a dilutive yearly bonus lol


Think before you speak... How are bonus shares in ANYWAY dilutive to shareholders??

its you who doesnt think 1. Any new shares created either through a bonus issue, rights issue, secondary offering or conversion of preferance shares will always result in the increase of the number of issued shares. 2. The new shares will always dilute the EPS and the DPS unless the company increases its payout ratio or EPS rises faster than the dilution factor.
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guru267
#9 Posted : Thursday, October 11, 2012 4:30:27 PM
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the deal wrote:
The new shares will always dilute the EPS and the DPS unless the company increases its payout ratio or EPS rises faster than the dilution factor.


@the deal you need to improve your accounting knowledge.. Let me help!

I hear what you are saying but with bonus shares it is very very different from rights issues, preferred issues and bond conversions!

1.Bonus shares do not increase or decrease the capital of a company!

2. Every shareholder receives the bonus shares for free pro rata hence the % ownership of ALL shareholders remains the same! (not dilutive)

3. If i had 1,000 NIC shares bought at an average cost of 30bob, when they give a 1:10 bonus i will get an extra 100 shares & my average cost will now be (30k/1,100 shares) which is 27.3bob...

If the EPS for NIC was 3bob and falls to 2.73bob because of new shares my P/E still remains at 10..

If DPS was 1bob and fell to 91cents because of the new shares i would still receive the same dividend... (1000*1)=(1,100*0.91)=1k

The value of my shares also remains the same... (1,000*30)=(1,100*27.3) = 30k
That is why a bonus issue is not dilutive provided the shareholder does not sell their bonus shares!

in the other share issues and debt conversions introduction of new investors and lack of funds by some shareholders are the main cause of dilution!


Mark 12:29
Deuteronomy 4:16
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Rollins
#10 Posted : Thursday, October 11, 2012 4:44:03 PM
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guru267 wrote:
the deal wrote:
The new shares will always dilute the EPS and the DPS unless the company increases its payout ratio or EPS rises faster than the dilution factor.


@the deal you need to improve your accounting knowledge.. Let me help!

I hear what you are saying but with bonus shares it is very very different from rights issues, preferred issues and bond conversions!

1.Bonus shares do not increase or decrease the capital of a company!

2. Every shareholder receives the bonus shares for free pro rata hence the % ownership of ALL shareholders remains the same! (not dilutive)

3. If i had 1,000 NIC shares bought at an average cost of 30bob, when they give a 1:10 bonus i will get an extra 100 shares & my average cost will now be (30k/1,100 shares) which is 27.3bob...

If the EPS for NIC was 3bob and falls to 2.73bob because of new shares my P/E still remains at 10..

If DPS was 1bob and fell to 91cents because of the new shares i would still receive the same dividend... (1000*1)=(1,100*0.91)=1k

The value of my shares also remains the same... (1,000*30)=(1,100*27.3) = 30k
That is why a bonus issue is not dilutive provided the shareholder does not sell their bonus shares!

in the other share issues and debt conversions introduction of new investors and lack of funds by some shareholders are the main cause of dilution!


@Deal, your turn please



Even a BrOKeN clock is right twice a day
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the deal
#11 Posted : Thursday, October 11, 2012 7:02:27 PM
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guru267 wrote:
the deal wrote:
The new shares will always dilute the EPS and the DPS unless the company increases its payout ratio or EPS rises faster than the dilution factor.


@the deal you need to improve your accounting knowledge.. Let me help!

I hear what you are saying but with bonus shares it is very very different from rights issues, preferred issues and bond conversions!

1.Bonus shares do not increase or decrease the capital of a company!

2. Every shareholder receives the bonus shares for free pro rata hence the % ownership of ALL shareholders remains the same! (not dilutive)

3. If i had 1,000 NIC shares bought at an average cost of 30bob, when they give a 1:10 bonus i will get an extra 100 shares & my average cost will now be (30k/1,100 shares) which is 27.3bob...

If the EPS for NIC was 3bob and falls to 2.73bob because of new shares my P/E still remains at 10..

If DPS was 1bob and fell to 91cents because of the new shares i would still receive the same dividend... (1000*1)=(1,100*0.91)=1k

The value of my shares also remains the same... (1,000*30)=(1,100*27.3) = 30k
That is why a bonus issue is not dilutive provided the shareholder does not sell their bonus shares!

in the other share issues and debt conversions introduction of new investors and lack of funds by some shareholders are the main cause of dilution!




I know everything you have stated above but you completely missed my initial post! What I was referring to above is Earnings Dilution

1. 1:10 means number of issued shares increase by 10%, everything held constant: your EPS in the example above is suppose to fall to 2.7 not 2.73.

2. If your EPS falls to 2.7 then your PE is not 1 its suppose to be 1.1...3/2.7=1.1

[/quote] The new shares will always dilute the EPS and the DPS unless the company increases its payout ratio or EPS rises faster than the dilution factor. [/quote]

By that statement above I meant this:-



The difference between the earnings growth and dilution rate is referred as real growth (or growth in earnings per share).
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gesowan
#12 Posted : Thursday, October 11, 2012 7:52:05 PM
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Posts: 289
@ SPARKY advised "Do both. Sell the shares that you have now, remaining with 100 shares. Apply for additional rights at 21. "

@guru267"This is the most dangerous advice for any rights issue that will be surely oversubscribed..

This move completely failed in the Stanchart issue and all previous DTB rights issues due to generous valuations and tiny capital reqirements..

The NIC and DTB issues will be highly oversubscribed so if you remain with 100 shares do not expect more than 25 additional shares from NIC..


Less ambitious but more realistic!!


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guru267
#13 Posted : Thursday, October 11, 2012 10:46:19 PM
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the deal wrote:
1:10 means number of issued shares increase by 10%, everything held constant: your EPS in the example above is suppose to fall to 2.7 not 2.73.


I did not know i would have to help with basic math too!

If company A has shs 3billion PAT and 1billion shares that gives an EPS of 3bob..

If the company gives a 1:10 bonus there will be 1.1billion shares.. if PAT stays constant the EPS will fall to (3/1.1)= 2.73

If the price was 30bob before the issue then market cap was (30*1)=30billion

If the market P/E is constant at 10 then share price after the issue will fall to 27.3bob but the market cap will still be (27.3*1.1)=30billion

The EPS and share price are just nominal values! The absolute values like market cap are what matter!

Just like a stock split bonus shares do not affect market cap!!
Mark 12:29
Deuteronomy 4:16
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FUNKY
#14 Posted : Friday, October 12, 2012 8:29:26 AM
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VituVingiSana
#15 Posted : Wednesday, January 02, 2013 9:59:44 AM
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Joined: 1/3/2007
Posts: 18,095
Location: Nairobi
Ndegwa family makes u-turn on NIC Bank stake

http://www.businessdaily.../-/3ev6t3z/-/index.html

The Board (controlled by ndegwas) applied an allocation formula that was not disclosed. The folks at CMA have no clue or are involved.

Other shady deals approved by CMA include:

- Transfer of Marshall's shares using 'fake' or 'duplicate' certificates while the original were held by Oriental Bank.
- Allowed KQ to publish an IM without projected financial statements for the 1/2 year. Then announced a KES 6bn loss which is almost 40% of the money collected in the Rights Issue.
- KQ was given exemptions from rules in the IM which would have kept GoK stake less than KLM.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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