Kengen Set To Raise $286mln To Finance Power Projects
After a two-year delay, power producer, Kenya Electricity Generating Company Limited, KenGen, is set to raise $286 million from shareholders through a rights issue.
KenGen has launched its much-awaited rights issue, aiming to raise 286 million dollars to finance new geothermal and wind power projects. The company is issuing two shares for each ordinary share held at an 18 per cent price discount.
Albert Mugo, Managing Director at KenGen Limited said “The issue to raise 286 million dollars is very important for KenGen because as you know we are in a growth mode. We are trying to get the generation capacity in this country to cope with the demand that is growing, also, very rapidly.”
“We have a pipeline of projects that we must implement by 2020, approximately 720 MW of that. In order for us to implement this project we need some money and that is why we are going to our shareholders to take their right so we can get some equity into the company.”
He also said that “The reason we are going to the shareholders is very simple, you cannot finance all your projects using hundred per cent debt. Financers ordinarily will ask what ‘equity are you putting in?’ If a project costs 100 million dollars, financers will provide anything between 70 to 80 per cent. So you still need money from the shareholders to put in some equity.”
“It’s taken long to deliver this because we needed consultations with government. You’ve heard the CS National Treasury saying that government is converting 20.2 billion Kenya shilling [$200 million]of its debt into equity so that it could still maintain its 70 per cent shareholding in KenGen. That consultation took a very long time.
In terms of the actual cash we are looking at about 8.6 billion Kenya Shillings [$85 million]. With government having taken 20.2 billion [$200 million] out of the 28.8 billion [$286 million], it leaves us with 8.6 billion [85 million]. That is the money, cash, that we are looking for from the existing shareholders.” Mugo told CNBC Africa.
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