The South African banking group Investec has raised £138.8 million ($200 million) on the London stock exchange, through the placement of 31 million shares, which represents 4.8% of its capital. According to the statement providing the information, proceeds from the fundraising will be used to redeem preferred shares previously issued by South African banks under Black Economic Empowerment (BEE) program.

As cash-flow ratio degraded and South African banks adopted new local prudential rules, the volume of preferred shares has dropped. Also, given associated dividends’ privileged status, the firm could face some challenges as it wishes to optimize its own funds.

The redeeming offer has to be approved by holders of the preferred shares. Investec has offered South African shareholders, an initial amount of R100, to which the bank added yet-to-be-paid dividends.

On the Johannesburg Stock Exchange, the shares, which over the past three years soared by 2.3%, traded at R91.6 on June 2, 2016.

Idriss Linge