What next for I&M Bank after oversubscribed Rights Issue?

I&M Bank Rwanda launched the trading of its Rights Issue shares which recorded an oversubscription of 112 per cent raising about Rwf 8Billion. The rights issue offer which had opened on September 25th presented an opportunity for current shareholders to increase their stake in a company, at a discounted price of Rwf 39.60.

The Rights Issue presented an opportunity for existing shareholders to increase their stake in the Bank by buying 1 new share for every 5 ordinary shares they held at a discounted price of Rwf39.60. A total of 202,000,000 new shares were issued.

The development was considered remarkable as funds were raised during a pandemic when capital is scarce and investors hesitant to spend.

With shareholders of the lender expressing confidence in the bank through the subscription of shares, the bank says that the additional capital will go into boosting their technology capacities as well as supporting Small and Medium Enterprises among other purposes. These, they figure, will improve the position of the player in the local market for long-term sustained growth.

With the additional funds, I&M Bank Rwanda is adequately capitalised in compliance with the 2018 Central Bank directive requiring local lenders to raise the minimum capital from the current Rwf 5Billion to Rwf 20Billion.

Robin Bairstow, the Bank’s Managing Director said that among the upgrades will include advancement in automation of processes, acquisition of necessary hardware among others.

“The capital sought aims to provide long-term funding for sustainable business growth and funding for investment in the Bank’s technological platforms for enhanced customer service,” he said. These, he said, targets both current and potential clients and will simplify clients' interaction with the bank.

Bairstow said that at the moment, major efforts with regard to expansion and maximization of digital platforms, include addition of hardware, software, adjustment of system infrastructure as well as other pre-requisites such as cyber-security protocols.

With the upgrades, the Bank will also spend on training and capacity building.

Currently, he said that they spend about Rwf3Billion annually on technology which is expected to go up over time.

Some of the proceeds of the rights issue will also go into continued support of local Small and Medium Enterprises which the bank said have the largest impact on the economy in multiple aspects such as job creation and value chains. Bairstow said that over time, the bank has adjusted processes and procedures to increase the eligibility of Small and Medium Enterprises to access lending facilities.

These include risk acceptance criteria and client acceptance criteria where the Bank exhibits patience for emerging firms as well as does not subject them to provisions made for corporates.

The bank’s support to SMEs, the Managing Director said, is not limited to any specific sector with the SME bracket including players borrowing less than Rwf 1Billion.

The SME support, he said, is expected to see more SMEs and emerging firms grow to become corporates as had been the case from their experience. Zephanie Niyonkuru the Deputy Chief Executive of Rwanda Development Board (RDB) commended the bank for its ability to raise financing despite the prevailing market conditions adding that it reflected the confidence of investors in the local market.

The development, he noted, is a reflection of Rwanda’s ambitions in establishing the Kigali International Finance Centre which will among other things serve to enable mobilization of funds for firms.

The Bank’s move to prioritize SMEs as well as continuously design products and services despite the risk perception, he added, is a positive development for the local economy.Celestin Rwabukumba, the Chief Executive of the Rwanda Stock Exchange noted that the recent mobilization of funds through the rights issue not only reflects shareholders confidence in the market but proof of the bourse’s possibilities for a wide range of players.

The Bank’s shareholders can be summarized as; BCR Investment Company, AfricInvest Evergreen Investments and the public and individual investors as well as bank’s employees.

The lender’s net interest revenue recorded an 8 per cent increase in 2019 to Rwf22 billion from Rwf20.2 billion in 2018.