Friday, October 07, 2005

CFC Bank to Issue Rights - Announced on Oct 7 2005

CFC Bank Limited is a holding company for various entities including Heritage AII. They recently acquired ALICO's life insurance business in Kenya.

I wonder what they will price the 12,000,000 Rights at since the the price, on Oct 7 2005, of 70/- is not "cheap" by any means. They have traded between 56/- & 70/- thus are at the higher end!

The Q3 2005 results haven't been released but it will be interesting to see what the resultant P/E ratio will be vis-a-vis other banks especially mid-tier banks like NIC Bank & Diamond Trust Bank.

It should be noted that these 3 banks generally have a higher P/E ratio than the most banks on the NSE.

CFC Bank is run by smart folks who have made it into a financial powerhouse & the "local" bank label & powerful connections provides intangible benefits denied Barclays or StanChart.

Nevertheless, their are many prominent shareholders who are associated with the KANU & NARC governments. Names (including proxies) include Charles Njonjo, Jeremiah Kiereini, Mwai Kibaki & P Jani among others.

The insurance industry is difficult to "price" out & details provided by CFC Bank on this business do not meet international (USA, UK & Netherlands) standards of disclosure.

Depends on the price of the Rights but definitely a good buy if priced at 60/- or lower.