Baroda secures future with bonus issue

Bank of Baroda completed a second bonus issue recently, pushing its paid up capital to sh25b, from sh10b in line with Central Bank requirements. 

 

Shareholders took up 1.5 bonus shares for every share to increase their stake in one of Uganda’s oldest banks.  The bank now intends to reduce minimum account balance requirements in most of its account types and increase its physical presence around Uganda to lure additional clientele and improve margins.  

 

S.S Mundra, the Baroda global boss, pointed out the global conglomerate has business worth $148b (about sh384 trillion) and $830m (about sh2 trillion) as at march 2013. 

 

The banking sector is generally scaling down its charges, with Standard Chartered Bank creating a special salaried loan rate of 17.5% per annum, below its prime rates of 19.5%, to increase liquidity and its margins. 

 

The share markets are currently suffering from a price mismatch on most counters, thereby restricting the number of closed deals.

 

There were only 244,130 shares traded at the close of business on Tuesday, resulting in sh66.7m turnover. 

Shareholders on the Stanbic counter are looking at selling at the prevailing sh30 per share level, while investors are interested in a sh25 per share price. The counter sold 50,000 shares for sh1.5m. 

 

There were 12.9 million shares in the offers outstanding basket against 36 million bids outstanding due to the price mismatch. 

Demand outstanding on the Umeme counter has risen to nine million shares at sh315, while outstanding supply remains nil at the prevailing sh345m per share level. A total sh64m turnover was made on Tuesday from 186,300 shares. 

 

“There was corporate action on some counters that momentarily saw prices rise. Investors would like to buy at the old prices, while shareholders are looking to take advantage of the new prices,” said Dan Edoma African of Alliance Uganda.  

 

The price of Uganda Clays stock has increased to sh35 per share from, sh30 per share two weeks ago, an indication of strong investor optimism on the counter.  

 

On the hand, Baroda’s share price dropped sh5 to trade at sh125 per share due to the bonus issue. 

Baroda sold 7,830 shares on Tuesday, while other counters were inactive due to a massive share price mismatch. 

 

African Alliance Uganda has applied to resume trading in unit trusts after a two year hiatus.  Confirmation from the Capital Markets Authority has not yet been secured. 

 

If successful, this will improve the variety of instruments traded on the exchange before the pensions sector is fully liberalised next financial year.