The Kenya Electricity Generating Company (KenGen) has received regulatory approval from the Capital Markets Authority for a corporate bond with a nominal value (face value) of KSh15 billion (US $196.8 mln). The offer is open from 8-29 September. The bond aims to raise capital for an additional 500 MW of generating capacity
According to a report on Reuters on 31 August, the bond would yield 12.5% net interest for investors. Kenya is one of several East African countries where fast economic growth has led to power shortages. Kengen produces about 80% of the electricity output, mostly in hydropower stations, and wants to expand geothermal generation by about 500 MW by 2012.
KenGen’s Managing Director, Eddy Njoroge, reportedly told an investor briefing that, if the bond was oversubscribed, the company had the option to take up an additional KSh 10 bln, although they have not yet decided whether to opt for this. “We have the projects even if we get 25 billion shillings,” he said.
The term of the bond is 10 years. Interest will be paid in the first two years and the principal sum would be redeemed every 6 months for 8 years in equal installments. The minimum investment would be KSh100,000 (approx $1,300) and extra investments would be in multiples of KSh100,000.
Standard Chartered Bank is reported to be lead arranger, KPMG the financial adviser and Standard Investment Bank the lead sponsoring broker. Retail investors are expected to take 20%, local and foreign institutional investors the rest.