HFC to raise GH¢50m through renounceable rights issue

Shareholders of HFC Bank have given approval to its board to raise an additional capital of GH¢50 million through renounceable rights issue.

The additional capital, among other things, is expected to help the bank meet the regulatory minimum capital requirement of GH¢120 million by the end of 2018 as per Bank of Ghana’s directive.

It is also to enable the bank to develop and expand its business and undertake larger volume transactions in line with its competitive strategy, which is expected to yield significant return on equity for the shareholders in the medium term.

The Board Chairman of the HFC Bank, Mr Charles Zwennes, at an extraordinary meeting of the bank, said the move would also improve the bank’s single obligor limits and also enable it to better serve the needs of its customers in a competitive environment.

Accordingly, he said the board of directors had opted to recommend an equity capital raised through a proposed renounceable rights issue to enable all shareholders to participate on an equal basis in the bank’s growth agenda.

He said it would also create an opportunity for shareholders to maintain their shareholding without being diluted by an alternative route to a capital raise.

Details of the rights issue

The exact number of offer shares and the issue right is expected to be determined by the Board of Directors immediately prior to the launch of the proposed right issue and would be set out in a prospectus to be circulated to shareholders.

It is intended that any rights not taken up or renounced by any shareholder will be offered to other participating shareholders.

The additional shares to be issued by the bank would also be listed on the Ghana Stock Exchange (GSE).

Change of name

The shareholders also gave approval to the board to change the name of the bank from HFC Bank to Republic Bank Ghana Limited.

In May 2015, Republic Bank Limited became the majority shareholder in HFC Bank with a 57.11 per cent equity stake following the closure of the mandatory tender offer to shareholders and the subsequent approval by the Securities and Exchange Commission (SEC).

Mr Zwennes said the name change was, therefore, to bring focus on the new image of the bank and support staff to live the new culture in alignment with the group’s culture and core values.

He said the company, which is now a subsidiary of Republic Financial Holding Limited (RFHL), would benefit immensely from the name change to that of its parent bank, which has total assets of US$10.7 billion.

New directors

The meeting was also to appoint two new directors to join the board. They are Mr Michael Addotey Addo, who is the Deputy Director General responsible for Finance and Administration at the Social Security and National Insurance Trust (SSNIT), and Mr David Addo-Ashong, a partner at Ashong Benjamin and Associates.