Archive for the 'IPO' Category

Innovative African IPO and listing successes show strong demand

Here is a round-up of recent initial public offers (IPOs) and other listings of shares on African Stock Exchanges, many of them over-subscribed. Namibia has scored its first listing of a special purpose acquisition company (SPAC), while Mauritius is the home for an innovative listing of Afreximbank GDRs and of 2 primary listings on the Johannesburg Stock Exchange.

Namibia: Nimbus Infrastructure Limited is first SPAC vehicle
Nimbus Infrastructure Limited listed on the Namibian Stock Exchange (NSX) via private placement and started trading on 6 October. It raised more than N$100 million ($7m) from local investment institutions and retail investors. It aims to invest into information, computer and telecommunications (ICT) projects and institutions in sub-Saharan Africa.

It is Namibia’s first listed capital pool company (CPC). This is a type of company, also known as a special purpose acquisition company (SPAC), is most popular in the USA or Canada and South Africa’s Johannesburg Stock Exchange (JSE) has listed several SPACs.

The company has no commercial operations or assets, except cash. It uses its cash to evaluate promising investments and once it has invested in a viable business, usually within a set timeframe, it continues to operate as a conventional listed company. The funds are kept in an escrow account and are released on approval by shareholders or in line with a pre-approved spending budget, according to the company website. It must also comply with the Corporate Governance Code for Namibia (NamCode).

The private placement was open from 15-29 September. The listing of Nimbus was a joint initiative between Cirrus Capital, Paratus Namibia and Cronje and Company.

According to the company, it “is currently looking at a number of potential transactions and as per the stock exchange rules, aims to take these transactions forward for shareholder approval before the end of the year.” Nimbuas has signed a management agreement with Paratus.

According to an NSX statement, reported in Namibian Economist: “The Nimbus listing boasts exciting opportunities for Namibia, as not only does it focus on the fast-growing ICT sector across the continent, but in so doing, it offers a strong diversification opportunity for the funds of institutions and individuals alike, allowing diversified jurisdiction, currency and sector returns for investors. Further to this, as Namibia’s first CPC, Nimbus represents an opportunity to prove a new concept that will likely form a critical part of the future development of the Namibian real and financial sectors”.

Côte d’Ivoire: Ecobank Cote d’Ivoire
Ecobank Cote d’Ivoire launched a share offer on 27 September and closed it the same day as it was already twice oversubscribed. The IPO was to sell 20.44% of the bank’s shareholding in the form of 2,250,000 shares at XOF20,000 per share, raising XOF45bn (USD79.5m).

The bank is set to list on the Bourse Régionale des Valeurs Mobilières (BRVM) in December, where it will join parent company Ecobank Transnational Incorporated (ETI), a leading share on the BRVM, the Nigerian Stock Exchang and the Ghana Stock Exchanghe.

The offer, organized by stockbrokers EDC Investment Corporation and Hudson & Cie had been scheduled to run from 22 September to 11 October. It was 2.2x oversubscribed on the first day.

According to Enko Capital “Ecobank Cote d’Ivoire was created in 1989 following the acquisition of Chase Manhattan Bank. The bank has since expanded to become the third largest lender in Ivory Coast with a market share of 10.5% in terms of loans and 11.7% in terms of deposits and employs 648 people across 53 branches holding 274,018 accounts.

“Prior to the IPO, ETI held a 94.26% stake in Ecobank Cote d’Ivoire and this will reduce to 75% post listing. ETI was founded in Togo in 1985 and currently has a presence in 36 African countries. The banking group is listed on three exchanges in Africa.. Its stock is owned by more than 600,000 shareholders and the group employs over 17,000 people across 1,200 branches and offices. Ecobank Cote d’Ivoire is the third largest contributor to ETI’s group revenue after Ecobank Nigeria and Ecobank Ghana.”

Namibia: Letshego Holdings
Letshego Holdings Namibia had to extend its IPO by 4 days to 26 September and drop its offer price from NAD4.70 to NAD3.80 per share, according to Enko Capital: “The main purpose of the IPO was to satisfy the Bank of Namibia’s conditions for granting a banking license to Letshego Bank Namibia in 2016 which require a minimum 45% local ownership within a four year period.”

Letshego listed on 28 September on the Namibian Stock Exchange (NSX)with a market capitlaization of NAD1.9 billion, according to a report in New Era and a press release.

Finance Minister Calle Schlettwein did not have a warm view of capital markets as he celebrated the listing: “’With this listing Letshego has taken a dive into the shark pool, but this is a well-prepared dive that you were truly prepared for”.

Over 3,600 qualifying applications were received during the 4-week offer, with individuals and non-institutional investors making up NAD40m of the total NAD180m raised.

NSX CEO Tiaan Bazuin said: “I am extremely pleased with the successful listing of Letshego. There has been a lot of talk about localization in the Namibian market and this listing shows the best way, in my mind, to achieve this goal.”

Letshego Namibia is an offshoot of Letshego Holdings Limited, listed on the Botswana Stock Exchange, which has reduced its holding from 85% to 79%. Letshego Bank Namibia has had a full licence since July 2016, and is a 100% subsidiary of Letshego Holdings Namibia. Its origin in 2002 was as Edu Loan Namibia, making salary loans, and in 2008 Letshego bought majority shareholding.

Mauritius – Afeximbank global depositary receipts
African Export-Import Bank (Afreximbank), headquartered in Egypt, raised more than its $100m minimum target after selling global depositary receipts (GDRs) backed by its Class D shares. The GDRs listed on the Stock Exchange of Mauritius was on 4 October. The minimum investment for the offer was $30,000 and it closed on 22 September.

Afreximbank is a supranational trade finance bank established in October 1993. Class A shareholders consist of African States, African central banks and African public institutions; Class B shareholders are African financial institutions and African private investors; Class C shareholders are non-African investors, such as international banks and export credit agencies; while Class D shareholders can be any investors.

South Africa: African Rainbow Capital Investments
This newly formed company listed on the main board of the Johannesburg Stock Exchange on 7 September, the 12th listing to date in 2017. It raised ZAR4.0bn ($282m) and brought the total capital raised on the JSE in the year to date to ZAR76bn ($54bn), according to this JSE press release.

ARC Investments is a capital raising and investment entity incorporated in Mauritius which will offer shareholders the opportunity to invest in a permanently broad-based black controlled investment entity holding a diversified portfolio of investments. The initial investment portfolio held by ARC Investments will be seeded by African Rainbow Capital Proprietary Limited (ARC), which will remain the majority shareholder in ARC Investments.

Shareholders invest alongside ARC in the initial portfolio of 16 investments in financial services including: Alexander Forbes Limited, Alexander Forbes Group Limited, Indwe Broker Holdings, Senayo Securities and Santam and and 17 non-financial services including investments in agriculture and food production, building and construction, energy, information technology and telecommunications, investment holding companies and real estate businesses. Its most significant investment is a 20% interest in Multisource Telecoms Proprietary Limited, currently trading as Rain. According to Reuters, ARC Investments is valued at ZAR8.5bn, and has 3 cornerstone investors including Singapore’s GIC Pte Ltd, the Public Investment Corporation and Sanlam Private Wealth.

ARC is a majority black-owned investment holding company which seeks to utilize its empowerment credentials, strong balance sheet and the track record of its leadership and brand to invest in financial services distribution businesses. ARC is wholly owned by Ubuntu-Botho Investments (UBI), which was created in 2003.

Patrice Motsepe, Chairman of both Ubuntu Botho Investments and ARC, said: “the listing of ARC Investments on the JSE is a major step towards realising one of the key objectives of ARC, namely to build a world class broad- based black – controlled investment entity for all South Africans.”

Nemer says the JSE is equally proud to help ARC Investments facilitate its goal of providing investment exposure for the public to B-BBEE assets, which are often only held privately.

South Africa – Steinhoff Africa Retail (STAR)

Holding company Steinhoff Africa Retail (STAR) successfully raised ZAR15.38bn (USD1.08bn) after placing 750,000,000 shares at ZAR20.50 each between 4 and 14 September. It listed on the JSE on 20 September.

It brings public shareholding to 21.7% of STAR, which was formed as part of the restructuring of the Steinhoff Group, and Steinhoff International holds 78.3%. The group has 4,808 stores in Angola, Botswana, Lesotho, Mozambique, Malawi, Namibia, Nigeria, South Africa, Swaziland, Uganda, Zambia and Zimbabwe. Brands operating under the STAR group include Pep, Ackermans, Poco, Russells, Flash, Bradlows, Rochester, Buco, Timbercity, The Tile House, Incredible Connection, HiFi Corp, Dunns, John Craig, Refinery, Shoe City, Tekkie Town and Sleepmasters.

According to Enko capital, the offer was 4.8x over-subscribed.

South Africa: Brainworks
Mauritius-registered investment holding company Brainworks, with an investment base focused on hospitality, real estate, financial serice and logistics in Zimbabwe, listed on the JSE on 13 October, after an IPO from 28 September to 11 October. It is the first Zimbabwean company with a proimary listing on the JSE and the 16th listing for the year to date, according to a JSE press release, where it sought to raise ZAR316.5m (USD22.3m) through the sale of 27,523,951 shares at ZAR11.50 per share.

Brainworks was established in 2011 and holds investments including controlling stakes in 2 listed hospitality companies, African Sun and Dawn Properties, which are listed on the Zimbabwe Stock Exchange. It also has investments in GetBucks, GetCash, GetSure, MyBucks, Skyclear and FML Logistics and says approximately 38% of revenue is generated in hard currency.

Donna Nemer, Director: Capital Markets at the JSE, says the exchange is proud to welcome Brainworks to the South African market. “As Africa’s largest stock exchange, the JSE believes we can make an important contribution to the growth and the development of our continent. We do this through offering foreign investors a secure and transparent entry point into Africa and providing the companies who do business here with a liquid platform to raise further capital to fund their expansion.”

Nemer says the JSE also favours dual- or cross-listings, wherein debt or equity is listed simultaneously on the JSE and on a local market. “This assists companies from other African countries to gain access to a much larger capital pool and trade in a more liquid environment, while still allowing local market participation.”

Thanks to research contribution by Enko Capital, which invests in African opportunities.

African IPO pipeline includes $3bn Vivo Energy

Investors have been snapping up Africa-focused IPOs (initial public offers) of shares and more capital-raisings and stock-exchange listings are in the pipeline. Biggest of the upcoming African IPOs is a reported share offer by Vivo Energy, while miner AfriTin, investment and real estate company Cytonn and property company Hystead also said to be heading for the markets.

Earlier this month, Wall Street Journal reported that Netherlands-based Vivo Energy, which is licensed to distribute Shell fuel and lubricants in 16 African countries, is working with investment banks to act as underwriters. Its offer, planned for the London Stock Exchange, could value the company at $3 billion.

Vivo Energy (photo credit Vitol Africa)


Vivo was created in 2011 after Shell sold 80% of its downstream operations in 14 African countries to Dutch firm Vitol Africa BV and private equity fund Helios Investment Partners in a deal worth $1bn and then sold the balance to them for $250 million earlier this year. Vivo operates 1,800 Shell fuel stations and sells Shell-branded products such as liquefied petroleum gas and lubricants to aviation, marine and mining in 16 markets.

AfriTin is a newly formed tin company which is acquiring the tin assets of Bushveld Minerals in Namibia and South Africa and announced plans for a £2m ($2.6m) capital raise on the AIM market operated by the London Stock Exchange. The assets will include 85% of Uis Tin Project, the former workings of Uis mine in Namibia, and assets in South Africa including Mokopane and Zaaiplaats Tin Tailings project.

Pieter Prinsloo, CEO of South African real estate investment trust (REIT) Hyprop, focused on shopping centres, said it was looking to list UK subsidiary Hystead separately on the Johannesburg and Luxembourg stock exchanges in the first half of 2018, according to this news report. Hyprop owns 60% of Hystead, which has interests in 4 malls in Montenegro, Serbia, Macedonia and Bulgaria valued at EUR460m ($535m). Hyprop listed on the JSE in 1988 and has property assets in malls in South Africa, Ghana, Zambia and Nigeria.

Kenya’s Cytonn Investment plc changed into a public company in August using a 2015 provision in the Companies Act. It said it plans to list 10m shares by introduction on the Growth Enterprise Market Segment (GEMS) of the Nairobi Securities Exchange in mid-2018. CEO Edwin Dande said on CNBC . It is not raising new capital but seeking to diversify sources of funding and increase corporate governance, transparency and accountability.

CampusKey houses 4,000 students in 6 locations in South Africa. It says it will list on th JSE when it gets to 10,000 beds and says this is on track for 2019.

Thanks to research contribution by Enko Capital, which invests in IPOs and other African opportunities.

UK regulator accused of dropping standards to woo $2 trillion listing

Investment institutions are protesting moves by the UK capital markets regulator, the Financial Conduct Authority, to alter listing standards to accommodate a potential $2 trillion listing on the London Stock Exchange. Meanwhile rumours are growing that Saudi Aramco may be dropping its plans for a £1.5bn initial public offer on the New York, London or Tokyo Stock Exchange in addition to the Tadawul (Saudi Stock Exchange).

According to this article in the Financial Times, a trend towards “uber compliance” for listed securities means Aramco is thinking of selling shares to sovereign wealth funds, possibly led by China, as an alternative to a public listing which would have been the world’s largest float.

On 15 October, Aramco said the giant listing is still on: ““All listing venues under review for optimal decision, IPO process is on track for 2018”.

Plans for a giant £1.5bn ($2bn) initial public offering of only 5% of Aramco’s capital are a key part of Saudi Arabia’s Vision 2030, which plans to wean the economy off reliance on oil, where it made up 90% of public revenues until 2014. However, in the short term it may signal Saudi intentions to use price-fixing cartel the Organization of Petroleum Exporting Countries (OPEC) to push up oil prices and boost the valuation.

Outgoing LSE CEO Xavier Rolet accompanied British Prime Minister Theresa May for a visit to Aramco in April, while Andrew Bailey, chief executive of the FCA, agreed the regulator had met the potential listing candidate before a consultation on revising the listing standards. Many observers think there is political pressure on FCA and LSE to win the listing from New York and prove that London is still competitive as Brexit uncertainty and economic damage impacts UK.

Consultation on the FCA’s new listing rules closed on Friday 13 October. It would be the world’s largest float.

According to writer Nils Pratley in The Guardian: “Furious fund managers sense a bad case of a regulator planning to lower standards to suit ministers’ short-term desire to persuade Aramco to float in London rather than New York.

“The investors’ objection is straightforward: why on earth would we want to create a ‘premium’ listing category for state-owned companies while not enforcing normal investor protections?

“Under the FCA’s proposal, the likes of Aramco would be allowed to ignore some basic principles. They would not have to get approval from outside shareholders for transactions with the state. They would not have to give independent shareholders a vote on who should serve as independent directors.

“There clearly could be a place for such companies in London, but you would hardly award ‘premium’ status, a label that is meant to indicate the highest governance protections. The regulatory regime would look like a pushover, which may succeed in drumming up some short-term business but could seriously damage London’s status as a good place to invest.”

On 18 October, the world’s biggest wealth fund warned the FCA that the listing changes would be a “step back”, according to an article in City AM. Norges Bank Investmnet Management, part of the Norwegian Central bank which manages assets on behalf of Norway’s $1trn fund, which has $44bn invested in LSE companies, wrote on 13 October to FCA:

“Ultimately, investors expect today’s high standards of shareholder protection to apply to the premium listing category, whether controlled by a sovereign state or private investors. We fear that relaxing these rules would reduce the voice of minority investors and undermine the independence of the board.”

NBIM said the changes would be a “step back” in terms of investor protection, especially for minority shareholders, and would threaten the London Stock Exchange’s standing as a best in class corporate governance framework: “We believe the FCA should consider a more balanced approach that takes into consideration the interests of all stakeholders in the listing environment.” Other protests about relaxing the listing rules have come from a wide range of institutions, including the Institute of Directors and investor group the International Corporate Governance Network which said the plans were “fundamentally flawed” and increased risk. The Investment Association boss Chris Cummings said the change: “could impact on London’s reputation and future as one of the world’s leading financial centres”.

FCA’s Bailey had told Parliament that people would not need to invest in the new listing if they did not like the governance. According to this article , he wrote: “We do not think protections for investors will be weakened. Plainly, absent the new category, sovereign-controlled companies would be unable to choose a premium listing; they would therefore not be bound by any of the premium listing requirements that might otherwise offer additional protection for investors.”

Bailey said some criticism of the proposal left the “incorrect impression that the premium listing is monolithic in form, and therefore, that any issuer included in that category must also be included in the main FTSE UK index”. Financial services advocacy group The CityUK supported the FCA’s “open-minded approach to regulatory change”.

Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said it will be “bad news” for London if the proposals are put in place: “It looks like the FCA is consulting on amending the existing listing rules to accommodate the peculiarities of one company, which is not a very effective strategy for regulating the market as a whole. If the proposals in this consultation document are implemented, it will be bad news for London and will reverse the progress we have made in recent years to uphold strong governance and protect minority shareholders.”

According to the Financial Times: “A market regulator that makes transparent and fair rules, respecting both property rights and investor choice, will attract business in the long run. If, on the other hand, attracting business becomes a short-term goal, and rules are tailored to land big deals, regulation becomes marketing, and the long-term outlook becomes much less attractive.”

Saudi Aramco says its 2018 listing is on track (photo Reuters/Ali Jarekji)

Vodacom Tanzania’s $213m IPO results due 7 August

According to the latest timetable on the website of Vodacom Tanzania, the extended $213 million initial public offer (IPO) of shares closed on 28 July. Shares are due to be allotted, the register delivered to the Dar es Salaam Stock Exchange (DSE) and the offer results announced on Monday, 7 August.

Refunds and CSD receipts will be printed on 14 August and the listing and trading of shares will be on 15 August. The offer had been extended previously, see our June story here , most recently from 10 July.

A total of 560m shares had been offered at TZS850 each, for an offer value of TZS476bn. It is the biggest IPO so far in 2017 on African capital markets.

The IPO follows the Electronic and Postal Communications Act of 2010 (EPOCA) which requires all telecom companies to list, and the June 2016 Finance Act requiring them to list at least 25% on the DSE to boost domestic ownership. According to news reports the law was changed in June (Finance Act 2017) to allow foreigners to participate.

According to a Business Report article, Vodacom spokesperson Byron Kennedy said in July that opening to international investors: “.. is a positive move for the more than 40,000 Tanzanians that have invested in the IPO as it is expected to improve liquidity of the Vodacom Tanzania shares once they are listed.”

Vivek Mathur, the chief operating officer for Vodacom’s international business, said in a prospectus in February that the capital raising and listing were in line with the government’s intention to strengthen the country’s telecommunications sector to play a key role as the engine of economic growth and socio-economic development: “This process also aims to widen financial inclusion among Tanzanians, and to economically empower the people of Tanzania.”

Reuters reports that two other major telecoms operators, Millicom’s subsidiary Tigo and the local business of India’s Bharti Airtel, have also submitted prospectuses to the regulator the Capital Markets Supervisory Authority CMSA and are awaiting approval for their IPOs.

Vodacom Tanzania wrapping up $213m IPO on Dar es Salaam bourse

Some 40,000 Tanzanians subscribed for the TZS476 billion ($213 million) initial public offer (IPO) of Vodacom Tanzania Ltd, part of South Africa’s Vodacom Group. The figure came from company’s MD, Ian Ferrao, quoted in the Citizen newspaper.

It is the largest IPO in the history of the Dar es Salaam Stock Exchange (DSE) and attracted many first-time buyers.

The company says it has 12.4m customers and 31% market share of a telecoms market it estimated was worth $996m. It says TZS2.6 trillion ($1.17bn) is transacted every month by over 7m customers of its M-pesa mobile money solution. It had offered 560m shares (25% of the company) at TZS850 each. The IPO opened on 9 March and was extended for 3 weeks after the closure date of 19 April and ended 11 May. The announcement of results was due on 26 May, and the listing was expected on 12 June 2017 but has not yet been reported. According to news reports, the Capital Markets and Securities Authority (CMSA) is busy with verification, according to Orbit Securities which is Vodacom’s lead advisor.

Mr Simon Juventus, General Manager of Orbit, said the time extension meant more investors could be reached: “This time around we reached many investors unlike the first six weeks … the progress was good.”

The IPO follows the Electronic and Postal Communications Act of 2010 (EPOCA) which requires all telecom companies to list, and the June 2016 Finance Act requiring them to list at least 25% on the DSE to boost domestic ownership, with foreigners barred.

So far only Vodacom is busy with the process. On 1 June, President John Magufuli said that telecoms licences would be revoked if telecom companies did not list on the Dar es Salaam bourse saying they made enough profit to pay the fines of TZS300m and ordered the Tanzania Communications Regulatory Authority (TCRA) to act tough against telcos that do not list.

According to the President, as reported in Daily News: “Listing at the bourse will enhance transparency and enable the Government to collect its fair share of revenues,” He noted that Ethiopia’s state-owned monopoly telephone company has 30m-35m subscribers and made $1.5bn profit. Tanzania Telecommunications Company Ltd (TTCL) has not paid any dividends since shares were sold to foreign investors in 1990s.

Other companies which list are Airtel (Bharti Airtel Ltd of India and Government each offered to sell 12.5% of the shares), Tigo (local subsidiary of Millicom International Cellular SA of Luxembourg) and Maxcom Maxcom Africa (MaxMalipo), which have presented their prospectus to the CMSA. According to Daily News, the Tanzania Communciations Regulatory Authority (TCRA) says there are 86 tele-firms which that s must list. andOthers include TTCL, Halotel Tanzania, Zantel and Smart. Finance Minister Philip Mpango proposed that smaller companies should be exempted from IPOs as he presenting the Finance Bill 2017 to Parliament.

Opening the IPOs to foreigners
Mpango on 22 June told parliamentarians that Government would bring legislation to allow foreign investors to buy shares in telecommunications companies listing on the DSE. According to Bloomberg , after the IPO stalled.

The combined value of expected telco listings would be $1bn, compared to stock exchange capitalization of about $8.4bn. The Daily News reported that the law change would probably be through a 2017/18 Financial Bill to amend EPOCA.
“We want to open up the mandate of companies listing 25% of their shares to allow Tanzanians, Tanzanian companies, Tanzanians in the diaspora, joint ventures between Tanzanians and foreigners, East Africans or companies owned by East Africans, or citizens from other countries.”

The article quotes George Fumbuka, CEO at stockbroker Core Securities: “We are now doing it the way it should’ve been done. I can understand trying to give special treatment for locals, but in the stock market it should be open market.” He said he thought Vodacom was overpriced and an open market would encourage compaies to price IPOs “more competitively”.

George Kalebaila, director for telecoms and Internet of Things in Africa at International Data Corporation, was quoted by The East African newspaper: “Equity markets need time to develop and I think 25 per cent is rather ambitious, as there is limited equity in local hands waiting to be invested. That’s why you see the shareholding structure of a couple of large organisations favour wealthy and politically connected individuals, who have access to capital.” Foreigners will also be able to buy the shares after the IPO

System to track electronic payments

On 1 June President Magufuli launched Electronic Revenue Collection System (e-RCS), which will be operated by Tanzania Revenue Authority (TRA) and Zanzibar Revenue Board (ZRB). The system is designed to track and directly collect Value Added Tax (VAT) and Excise duty on all electronic transactions by communication companies and financial institutions, with the views of enhancing efficiency in the collection of government revenues.

Tanzania Revenue Authority Commissioner General Charles Kichere said only 3 companies – Halotel, Smart and TTCL – have so far joined e-RCS. He said it was an efficient tool for tracking and collecting revenues through electronic payments without human intervention.

IPO for I&M Bank Rwanda extended to 10 March


The extended deadline for the initial public offer (IPO) of I&M bank Rwanda is 10 March. The Government is selling its 19.8% stake in the bank in an offer launched on 14 Feb and originally set to close on 3 March. On offer are 99 million shares at RWF90 ($0.11) each, with a minimum purchase of 1,000 shares.
The offer could contribute nearly RWF8.9bn towards Government plans to raise RWF11.5bn ($13.9m) to build a second airport near Kigali, according to a report in KenyanWallStreet.com. As part of the offer, 5m new shares were created for an employee share offer programme (ESOP).

Prospectus delays
The Ministry of Finance and Economic Planning said it had received enthusiastic investor interest across the region. According to a statement: “This is to ensure that prospectuses and application forms reach investors across the country and the East African region in good time, and in response to requests from retail and institutional investors given the early start to the year, it has been decided to avail additional time to enable investors participate.”
New Times newspaper quotes Shehzad Noordally, the Chairman, Rwanda Association of Stockbrokers and Market Intermediaries: “There has been a slight delay in publishing prospectuses, which is an administrative issue that has been resolved. This has, therefore, resulted in the prospectuses not being distributed on time to the general public”.
I&M Bank, the Capital Market Authority, and the Rwanda Stock Exchange have approved the extension. The shares will be listed on the RSE.
The Government is committed to the development of capital markets as a means to building a strong foundation for long-term financing for both private and public sector, according to Minister for Finance and Economic Planning, Claver Gatete.
Previously Government has sold shares in 2 enterprises leading to listings – Bralirwa (Brasseries et Limonaderies du Rwanda, the largest brewer and beverages company) and Bank of Kigali. The other local listing is Crystal Telecom, subsidiary of Crystal Ventures Ltd, which represents a chance to trade the shares of MTN Rwanda. Crystal Ventures was profiled in the latest issue of The Economist magazine.
I&M Bank Rwanda was established in 1963 and was called Banque Commerciale du Rwanda Limited (BCR) before becoming the Rwanda subsidiary of I&M Bank Group Limited, headquartered in Nairobi, with operations in four countries.

Reasons for privatization

According to an earlier CMA press release, this is the Government of Rwanda’s strategy behind the listings:
“It is the GoR’s objective to encourage investment of shares of successful companies amongst the citizens of Rwanda, and to promote the development of the country’s capital markets. The GoR is pursuing a divesture program of state-owned enterprises, which kicked off in earnest in 1997 with a total of 72 institutions earmarked for privatization/divesture.
The specific objectives of GoR’s privatization /divestiture program entail:
• Reducing the shares held by Government in public companies and thus alleviating the financial burden on its resources (through the elimination of subsidies and state investments) and reducing its administrative obligations in the enterprises
• Ensuring better management and financial discipline in privatized companies
• Attracting foreign investment in Rwanda and the accompanying transfer of technology and knowhow
• Developing and promoting Rwanda’s capital markets and
• To give to the wider public the opportunity to participate in the shareholding of a well-run company”.

Africa IPO round-up

A roundup of some recent initial public offers (IPOs) of shares on Africa’s stock exchanges to raise capital

In early October, MTN launched plans to sell up to 35% of shares on the Ghana Stock Exchange. Ghana’s Securities and Exchange Commission Director General Adu Anane Antwi confirmed they had started the listing process and were working on the prospectus but no timeline had been given. According to local reports, MTN received its 15-year 4G licence in 2015 after spending $67.5m and on condition that it lists. It hopes to raise up to $500m.
MTN Nigeria is also working on plans for an initial public offer (IPO) of shares on the Nigerian Stock Exchange in 2017 which could raise up to $1bn. Nigeria is among several African governments encouraging telcos to list on local bourses and listing is among conditions to settle a record NGN330bn ($1.1bn) fine for failing to disconnect 5.1m unregistered subscribers. Nigeria contributes a third of sales and profit for the Africa’s biggest phone company, which is listed in Johannesburg with market capitalization of ZAR212.8bn ($15.3bn) in early October.
Listings and capital-raising momentum has been maintained on the Nairobi Securities Exchange. Deacons Kenya is the first listed fashion retailer, after joining the Alternative Investment Market Segment (AIMS) of the NSE on 2 August. CEO Muchiri Wahome said the extra funds were to fund expansion into towns with “a vibrant middle class” across Kenya, spurred Kenya’s rapid and ambitious devolution and setting up 47 counties under its 2010 Constitution. Deacons is also eyeing opportunities in neighbouring Rwanda and Uganda. It will also help existing shareholders who want to sell. The retailer listed about 123m shares at an opening price of KES15 ($0.15) each, but by early October the price had slumped to KES8.55.

 

Nairobi centre (credit www.kenya-advisor.com)

Nairobi centre (credit www.kenya-advisor.com)

In June, leather and shoe retailer Nairobi Business Ventures, which operates the brand KShoe, had become the fifth listing on the NSE’s Growth and Enterprise Market Segment aimed at smaller businesses. It was listed through introduction and valued at KES118m ($1.2m). Previous 2016 share issues included Longhorn Publishers in May. In June power generator Kengen succeeded in the Kenyan bourse’s largest rights issue, raising KES26.4bn ($262.1m) by offering 4.4bn new shares at KES6.55 each, with a 92% subscription rate. Kengen has projects to generate another 700MW of power, of which 605MW is geothermal.
However, Fusion Capital had to cancel its IPO despite extending twice after only getting 38% uptake and four investors for its KES2.3bn offering and failing to meet the minimum threshold.
The Johannesburg Stock Exchange had its second private equity listing. Universal Partners raised R1.3bn ($93.7m) in an IPO which was only open for 4-5 August and started trading on the Alt-X market on 11 August. The company was registered in Mauritius in April and also listed on the Stock Exchange of Mauritius. Its mandate is to invest in properties across Europe, at £10m-£30m ($12m-$37m) each and it aims to start investing within six months. The IPO was for 72m shares at R18.07 each. Several companies aiming to raise capital for African and international investments have dual-listing on the Mauritius and Johannesburg exchanges.
Liberty Holdings is likely to follow up its Kenyan IPO success with a South African Real Estate Investment Trust (REIT) called Liberty Two Degrees in December. This will include some ZAR6bn of its existing portfolio, including iconic malls around Gauteng, and ZAR4bn of new money. As in Kenya, the property investments are managed by Stanlib.
West Africa’s integrated regional stock exchange, Bourse Regionale des Valeurs Mobilieres (BRVM), based in Abidjan, Côte d’Ivoire, plans to build a platform for listing mining shares and raising capital locally. The exchange is talking with Canada’s Toronto Stock Exchange (TMX Group), a favourite bourse for early-stage mining entrepreneurs. BRVM General Manager Edoh Kossi Amenounve says it could open by 2018 and will be for companies exploring or operating mines in the region. There is likely to be a waiver to the usual requirement for 2 years of trading history. The BRVM links eight West African countries, including gold exporters Mali, Burkina Faso and Côte d’Ivoire, and fourth-largest uranium producer, Niger.
Egypt’s Minister of Investment Dalia Korshid says the Government aims to raise up to $10bn over the next three to five years with IPOs of government-owned companies in the oil sector but will start with restructuring state-owned electricity companies.

Dar es Salaam Stock Exchange IPO nearly 5x oversubscribed

Total bids for the initial public offer (IPO) of shares in the Dar es Salaam Stock Exchange PLC were TZS35.8 billion ($16.4 million). This is 4.8 times the offered amount of TZS7.5bn ($3.4m) in the IPO which ran from 16 May until 3 June. Next steps include the DSE to refund excess bids after exercising its “green shoe” option, which allows up to 10% extra, and then to self-list on 12 July on its own Main Investment Market Segment under the ticker “DSE”.
According to the DSE announcement: “The planned self-listing is in line with the global trend and practice for exchanges, and is aimed at achieving good corporate governance practices, efficiency and effectiveness of the DSE and further strengthen its strategic and operational practices.” The DSE said in its prospectus it planned to use IPO proceeds to enhance its core-operating system, introduce new products and services and for “strategic and operational purposes”.

Moremi Marwa of DSE and UK Secretary of State for International Development open trading on the London Stock Exchange. Credit: London Stock Exchange

2014: Moremi Marwa of DSE and UK Secretary of State for International Development open trading on the London Stock Exchange. Photo: London Stock Exchange


DSE management are doing an excellent job and there is great potential for the exchange to keep serving the supply of long-term risk capital to one of Africa’s fastest-growing economies. It is sticking closely to its offer timetable and has announced results on time on 16 June. Next is to credit accounts with shares at the central securities depository (CSD) on 24 June and process the refund cheques on 30 June before the self-listing and trading of fully-paid DSE shares on 12 July.
The receiving bank for the DSE offer, as with many Tanzanian IPOs, was local leader CRDB. The lead transaction manager is Orbit Securities Company Limited which said interest was very strong. During the IPO the shares could also be bought using Tanzania’s MAXMALIPO payment gateway or by dialling *150*36# on a Tanzanian mobile phone.
According to an earlier statement by CEO Moremi Marwa: “Over the past few years the DSE has achieved significant milestones, notably:
• Compounded annual growth rate of 110% since 2010 for market capitalization to TZS21trn by 30 March 2016
• Compounded annual growth rate of 56% since 2010 for liquidity to an aggregate average turnover of over TZS800bn per annum
• Introduction of the Enterprise Growth Market (EGM) segment and the increase of listings of both equity and bonds
• Introduction of mobile trading on the DSE trading, depository and settlement platform
• Increased financial independence sustainability and profitability.
As at 30 March 2016 the Exchange had 23 listed equities and 3 outstanding corporate bonds. There are also Government bonds, worth about TZS 4.6trn listed on the exchange, making the DSE the second largest exchange in the East African region.”
According to the prospectus, 3% of shares were reserved for DSE employees and 15% for a capital markets development fund.
Previously DSE was a mutual company limited by guarantee with no shareholders and no capital. The 20 institutions that acted as guarantors – including 8 of the 11 stockbroking firms currently trading – agreed to be issued with 1 share each with nominal value TZS400 by 29 June 2015. It was part of the process as the bourse restructured and changed from Dar es Salaam Stock Exchange Ltd to the Dar es Salaam Stock Exchange Public Ltd Company (Plc).
Among recent changes at the dynamic exchange are
• Migration to the new efficient automated trading system and central depository system (2013), supplied by South Africa’s STT (Securities and Trading Technology system)
• Reduction of settlement cycle from 5 days to 3 days for equities and 3 days to 1 day for bonds in line with international standards (2013)
• The Capital Markets & Securities Authority (CMSA) put in place the enabling regulatory framework and licensed the NOMADs to create a framework for a new Enterprise Growth Market segment of the DSE which was launched in 2013. Since the five companies have listed on the EGM
• Interlinking the exchange’s central depository system to the national payment system (2014)
• Deployment of ATS on the wide area network and start of remote trading by brokers (2014)
• Introduction of the regulatory framework and subsequent use of mobile phone technology in IPOs (equity and debt) and secondary trading (August 2015)
• Limits on foreign investment were recently lifted. There is also increasingly close cooperation in the exciting East African region, including installation of an interconnectivity hub for routing trading order between the exchanges.
New products which the CMSA and DSE are developing include real-estate investment trust (REIT), futures and derivatives, exchange-traded funds (ETFs), closed end collective investment schemes and municipal bonds.
Your author was honoured to be team leader of the CAPMEX/Wiener Börse AG team that wrote the demutualization strategy.

Source Dar es Salaam Stock Exchange

Source Dar es Salaam Stock Exchange

Tech will drive African IPOs

Telecoms, e-commerce and technology will be the driving force behind many of Africa’s coming initial public share offers (IPOs) as the continent’s telecom, media and technology (TMT) sector continues to grow fast. Ben Nice, editor of specialist news provider TMT Finance, says in a press release: “Despite global volatility, regional macroeconomic uncertainty, and a rout on commodity prices, recent forecasts are predicting that the next 12 months could see a rebound with IPOs set to reach their highest levels in Africa since 2010, and several TMT companies looking likely to float in 2016 and 2017.

Africa Internet Group (AIG) – which runs the Jumia ecommerce brand – just raised a further EUR75 million ($84m) from Orange, in addition to the recent EUR300m ($338m) from investors including Goldman Sachs, MTN and Rocket Internet. The company is the first real African tech unicorn and we understand that it will be targeting an IPO (initial public offer) by 2017, and is also on the hunt for a new CFO. Orange Egypt (formerly Mobinil) is also preparing to list shares in Cairo to fund US$3.2bn investment into infrastructure, and IHS Towers, the Lagos-based mobile tower operator, is also expected to float over the next 12 to 24 months.”

Other African tech which may bring IPOs in the near and medium term include: Dark Fibre Africa of South Africa, Nigerian payment services provider InterSwitch, Africa’s largest independent fibre operator Liquid Telecom, and South African media company Primedia. According to a previous news story, Interswitch may scoop the prize (and publicity) as Africa’s first tech unicorn, as it is working on a London and Lagos IPO for Q2-Q4 and could be worth at or close to $1bn.

AIG, which was founded in 2012 and now operates in 23 countries with 71 companies, is said to be planning an IPO by 2017. Jumia e-commerce is present in 11 countries and linked to online and mobile consumer services such as Kaymu (shopping), hellofood (food delivery), Jovago (hotel booking) and classified ads Vendito (general merchandise), Lamudi (real estate), Everjobs (jobs) and Carmudi (vehicles).

Orange Egypt, rebranded from Mobinil in March, is preparing an IPO for the Egyptian Exchange, with an offering of up to 20% of the shares. It has 33.4m customers and is Egypt’s second biggest operator after Vodafone. In March it announced Orange intended to invest EGP2.5bn ($281.5m) into upgrading networks and services.

IHS Towers, based in Lagos and owner of over 23,300 mobile phone towers in Nigeria, Cameroon, Côte d’Ivoire, Zambia and Rwanda, is expected to float shares within 12-24 months. In December, chief executive and founder Issam Darwish said it would be “the biggest IPO ever in Africa”.

Next week on 14 June, over 200 industry and finance executives, including African telecom CEOs, private equity investors and leading international bankers and advisers, are meeting in London to talk investments at the 7th annual TMT Finance & Investment Africa 2016 conference. Sessions include: Africa telecom leadership; TMT M&A; broadband investment; mobile towers; raising finance for Africa TMT; datacentres Africa; private equity Africa; mobile money and M-Commerce; and digital Africa. Speakers include leaders from Millicom, Google, IHS, Helios, Eaton Towers, Avanti Communications, BNP Paribas, Citi, UBS, Standard Bank, IFC, the World Bank, TransferTo, Icolo, Bima, Dentons and Hardiman Telecommunications.

Tech wizards to IPO (from www.africainternetgroup.com)

Tech wizards to IPO (from www.africainternetgroup.com)

BRVM securities exchange strategy dialogue with US frontier funds

New York, May 12: Sixteen new listings, spurred by privatizations and private equity fund exits, are a key target for Africa’s top-performing securities exchange. The Bourse Régionale des Valeurs Mobilières (BRVM), headquartered in Abidjan, Côte d’Ivoire, is among the world’s most successful integrated regional exchanges, linking eight West African countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo).

In New York this week, 30 US frontier investors, stockbrokers and market specialists joined Mr. Edoh Kossi Amenounve, CEO of BRVM, in a strategic dialogue. Suggestions from the Americans included lower stockbroker commissions, more listings, liquidity, and stepping up listed company reporting to international financial reporting standards (IFRS).

The BRVM has 36 listed bonds and 39 listed companies, and expects four new listings in 2016, following initial public offers (IPOs). In 2015, the BRVM Composite Index rose by 17.77% making it Africa’s top-performing equity index to foreign investors.

Amenounve says: “Most of the economies are not badly affected by the oil price. They are growing through regional linkages. We saw 6.6% GDP growth in our markets in 2015 and expect 7.2% this year. BRVM is different from other markets as our currency, the CFA franc, is pegged to the value of the euro. We offer yield, without the high volatility seen in other African markets.”

The value of trading on the BRVM exchange rose 48% in 2015. Amenounve says local participation is growing even faster: “More and more citizens are becoming shareholders, which is the best way for our people to take ownership of our growth drivers and means of production. In 2012 foreign investors made up 55% of the trading, but the local share had risen to 75% by 2015, of much bigger trading volumes. In 2011, domestic collective investment schemes managed XOF 30bn of assets, but by the end of 2015 that was XOF 600bn, a 20-fold increase.”

Amenounve is leading plans to integrate five West African markets – Nigeria, Ghana, BRVM, Cape Verde and Sierra Leone – by 2020 to form Africa’s second biggest exchange after Johannesburg, with 273 listed companies and 233 brokerage firms. He has been Chairman of the West African Capital Markets Integration Council (WACMIC) since March 2015 and explained the three-step plan for integration:
* Phase 1 is sponsored access for brokerage firms, which was launched in July 2015 and has seen several transactions between Ghana and Nigeria.
* Phase 2 will be a “common passport”, giving a regional stockbroker direct access to any market.
* Phase 3 will be to follow the Euronext model, with a single trading platform and a single order book for all the markets.

The BRVM is Africa’s sixth securities exchange by market capitalization ($12.8 billion for equities and $2.7 billion debt) in 2015. It represents an economic area of more than 100 million consumers, with fast, diversified growth. See more at: www.brvm.org.

The meeting was organized by AZ Media in New York and ourselves, African Growth Partners Ltd.

Edoh Kossi Amenounve, CEO of BRVM exchange

Edoh Kossi Amenounve, CEO of BRVM exchange