AccessKenya Group, the only publicly listed Internet service provider, has issued 10 million bonus shares to shareholders after gaining approval from the Capital Markets Authority (CMA) and by shareholders. In yesterday’s trading the share appreciated 1.8% to close at KES 5.65 from KES 5.55 the previous day.
The approval will enable the company to issue and list an additional 10,382,785 ordinary shares at KES 1 each in the ratio of one new ordinary share for every 20 ordinary shares held at the close of business on Wednesday.
A bonus issue is a proportionate offer of free additional shares to existing shareholders. A company may decide to issue bonus shares as an alternative to a dividend payout. Speaking at the group’s Annual General Meeting (AGM), Managing Director Jonathon Somen said they decided against paying dividends to protect the company from going further into debt due to the high interest rates currently in the market.
It seems that the market had been expecting the bonus issue as the share price has been steadily increasing over the course of the month. Investors have been purchasing the share so as to benefit from the new issue of shares. This increased demand for the share may be the reason why the share has been appreciating.