DFCU bolsters Capital with sh160b bonus issue

By Samuel Sanya

THE Development Finance Company of Uganda (DFCU) has listed 248.6million new shares worth sh160b on the Uganda Securities Exchange (USE) as it readies to expand its network reach and to support enterprises in the Oil and Gas sector.

Speaking at the Prism House complex at the listing of the new shares, Innocent Dankaine, the USE acting Chief Executive Officer noted that the additional capital will enable DFCU banks capital to keep within ever increasing regulatory requirements.

Though sufficiently capitalized, an African Alliance sector report notes that Bank of Uganda is currently following Kenya and South Sudan in demanding for additional capital from lenders, a move that is likely to put a strain on Ugandan banks.

“One of our aims will be to increase our branch reach to 50 branches from 45 at the end of the year. We intend to support Small and Medium Enterprises that will be supplying the oil and gas sector,” Paul Van Apeldoorn, the DFCU bank head of business said.

DFCU bank took on Global Trust Bank’s assets, loan and deposit book after the latter’s closure in July 2014 following an accumulated loss of UGX 60bn (USD 23m). The DFCU Group registered half year profits of sh19.1b from sh18.61b in July this year.

The additional shares were agreed on at the DFCU Annual General Meeting on 30th June 2014 where each shareholder received 1 new share for every one held, doubling the number of listed shares to 497.2 million shares.

The DFCU shares are trading at sh650 on the stock exchange, hitherto, they were trading at sh1,200 per share. Elly Karuhanga, the Chairman DFCU limited noted that the shares are now more affordable.

He added that the impending signing of production agreements between government and international oil companies and the start of construction work on an oil refinery will deliver growth for the economy and the company.

The bonus shares are part of DFCU’s 5 year corporate strategic plan (2014/2018) that aims is to transform the bank into a robust retail bank leading to increased customer numbers.

Recently, the National Insurance Corporation (NIC) also listed its bonus shares listed on the Uganda Securities Exchange after offering 11 new shares for every 8 shares held increasing the outstanding number of issued and fully paid shares from 596.12 million to 1.42 billion shares.

Kenneth Kitariko, the African Alliance Uganda Chief Executive Officer noted that the stock exchange is gaining traction as more companies opt to use equity and not just debt, especially bank loans, to expand their operations.