The African Export-Import Bank (Afreximbank) is to receive a $500-million capitalization following a decision by the Bank’s shareholders today to authorize a share offering to the Bank’s existing shareholders.
Rising from their Fourth Extraordinary General Meeting in Cairo, the Shareholders signed off on the $500-million share offering which would be in the form of paid up funds that would increase the Bank’s capitalization to enable it “take advantage of the tremendous financing opportunities as a result of the rapidly rising demand for its services and the quickening of Africa’s economic growth while maintaining sound credit rating”.
The shareholders were acting on the recommendation of the Board of Directors which requested them to support the share offering that would be allocated on a pro rata basis to existing shareholders according to the level of their current subscriptions to shares in the Bank.
Under the terms of the decision, shareholders would have the right to transfer their offering to another existing or new shareholder but with the approval of the Board of Directors. In addition, existing shareholders are allowed to accept the offering by migrating to Class “D” shareholding.
Other decisions by the shareholders include:
- Approval that the offer could be pre-financed by the Bank by a bridging or other financing arrangement on terms determined by the Board of Directors;
- Approval of the various initiatives undertaken by the Board of Directors and the Management for the optimization of the capital funds, including the issuance of hybrid capital investment instruments; and
- Acknowledgement and approval of the procurement of insurance products from the Multilateral Insurance Guarantee Agency or the private insurance market to cover the risk of default of shareholders on their obligations or liabilities in connection with any uncalled portion of the subscribed capital of the Bank.
In addition, the shareholders gave their approval for the Board and Management of the Bank to continue the drive to attract new shareholders, particularly from African states which have not yet acceded to the Bank.
Earlier, Afreximbank President Jean-Louis Ekra had told the shareholders that the Bank had been a victim of its own success, noting that it had grown very fast, but, as a consequence, demand for its services had grown even faster.
“Approving this share offering will give Afreximbank the capacity to continue to be relevant to the African continent,” said Mr. Ekra.
In a Presentation to the shareholders, Dr. Benedict Oramah, Executive Vice President of Afreximbank in charge of Business Development and Corporate Banking, said that the capitalisation would raise the Bank’s annual trade finance capacity to about $40 billion and would enable it to attract approximately $60 billion in additional financing into Africa through its syndication activities.
Afreximbank has a four-tier shareholder base, consisting of Class “A” shareholders, constituted of African states, African central banks and African public institutions; Class “B”, made up of African financial institutions and African private investors; Class “C” consisting of non-African investors, mostly international banks and export credit agencies; and Class “D”, who are a new tier of shareholders approved in December 2012, holding fully paid par value shares and who can be any investor.
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