World Bank’s IFC to own 7.4pc stake in Kenya AirwaysBy GEORGE NGIGI | Thursday, April 26  2012 at  12:06

The World Bank investing arm, the International Financing Corporation (IFC), will own 7.4 per cent of Kenya Airways after conclusion of a rights issue through which it is expected to buy 143 million shares of the 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 the national carrier’s rights issue guidelines.

The full uptake of the shares will see IFC own about 7.4 per cent 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.

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.

IFC has committed to take up $25 million (about Sh2.068 billion) worth of shares in the issue and had approved an additional Sh6.6 billion ($80 million) in debt to fund the airline's expansion plans.

Kenya Airways is also targeting Sh182.5 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 government, which owns 23 per cent of Kenya Airways shares, and Dutch airline KLM, which has a 26 per cent stake, have already given irrevocable commitments to take their full rights.

This would mean that IFC’s purchase, which is equivalent to 10 per cent of the 1.4 billion shares on offer, will raise the guaranteed uptake to 59 per cent of the Sh20.7 billion ($250 million) cash call.

The transaction arrangers have set a minimum target of 70 per cent uptake to consider the share sale a success.

Results of the rights offer, which closes on Friday, will be made public on May 30.