Kenya Airways Ltd., sub-Saharan Africa’s third-biggest airline, dropped the most in a week on concern dilution from its rights offer may outweigh the positive effect of the company’s expansion plan.
The stock fell as much as 6.2 percent to 13.60 shillings before trading 1.7 percent lower at 14.25 shillings by the close in Nairobi, the biggest fall since March 14.
The airline will offer 1.48 billion shares, issuing 16 for every five held at 14 shillings each from April 2 to April 18 to raise $250 million, the company said March 12. The shares have fallen 17 percent since that date. On an intraday basis, the stock fell below its proposed offer price today.
“The concern among investors is how quickly the money raised will start generating income for the business because of the level of dilution of the value of existing shares,” Eric Musau, a research analyst at Nairobi-based Standard Investment Bank Ltd., said in a phone interview today.