Dar Es Salaam bourse aims for IPO and 2 cross listings, capital controls easing

As the East African region moves towards faster integration, Tanzania is preparing to ease controls on the amount of shares foreigners can buy, in line with changes in the rest of the region. The Dar Es Salaam Stock Exchange (www.dse.co.tz) is also hoping to increase from 15 to 18 listed companies and is preparing for an initial public offering (IPO) for Precision Air (www.precisionairtz.com) during September and cross-listings of 2 mining firms listed in London.
Gabriel Kitua, CEO of the Tanzanian bourse, told Reuters on 24 August at a meeting organised by the Nairobi Stock Exchange: “Tanzania is not exactly a closed market. Up to 60% of any listed security is available to any citizen of the world, 40% is reserved for Tanzanians… with time, the control will be erased especially as we go to the regional monetary union where free movement of funds across the countries will automatically be there.”
Reuters says the 5-nation East African Community (EAC) bloc of Rwanda, Burundi, Uganda, Tanzania and Kenya aims to have a monetary union in place in 2012 and move to a political federation by 2015. It reports that Tanzania has the tighter capital controls, including barring foreigners from investing in government securities.
Kitua also said that the approval of the cross-listing of African Barrick Gold Corporation (www.africanbarrickgold.com) is advanced: “The approval process is almost complete”. He added “The other one is in very initial stages … it is a mining company,” according to Reuters.
Barrick (ABX, listed on the Toronto and New York stock exchanges) owns 73.9% of African Barrick Gold and raised $884 million through offering the rest of the shares in an IPO on the London Stock Exchange in March 2010. Barrick describes itself as “the gold industry leader, with a portfolio of 26 operating mines and advanced exploration and development projects located across 5 continents”.
Precision Air’s listing application was received and being considered by the Capital Markets and Securities Authority (CMSA) in February, according to local news reports. At the time it was reported that Precision Air sought to raise $25m (about TSh38bn) in the IPO. Kenya Airways owned 49% and Michael Shirima, the founder and chairman of the airline, owned 51%. The IPO would see their stakes diluted to 34.2% and 34.6% respectively.
Reuters also adds that East African Breweries Ltd of Kenya is expected to offload its 20% stake in Tanzania Breweries Limited in a public offering. Kitua rejected claims in a regional paper earlier this year that EABL had been compelled by Tanzanian authorities to offer the shares at a set price: “In capital markets there is no compelling of people. This is a free market economy and decisions are done by the board of directors of the companies and no one can interfere with that.”
The agency says the most heavily traded shares on the DSE are banks such as CRDB and National Microfinance Bank and manufacturer Tanzania Cigarette Company. TBL is the biggest by market value.
“For the last 12 months the Tanzania share index has risen by 17% and the all share index by close to 7%. The market has been growing,” Kitua said. The Tanzania share index excludes shares cross-listed from the NSE, including Kenya Airways. Kitua said the postive performance is due to good earnings by listed companies and the stable Tanzanian economy: “There are signals that the trend will be on an increase for the next 6 months.” He warned that inflation is past 10% and is emerging as a challenge.
The DSE delisted the National Investment Company (NICOL) with effect from 6 July after a 1-month suspension from 6 June and it become the first company in the 12-year history of the Tanzanian bourse to be delisted. This was on account of the firm’s failure to submit 2009 and 2010 financial results, and failure to comply with a directive from the DSE Governing Council about plans to sell 22m shares it owned in National Microfinance Bank (NMB), which is also listed.

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