February 5th, 2010 by Tom Minney
The closure today (5 February at 5pm local time) of the share offer of Uganda’s National Insurance Corporation Limited (www.nic.co.ug) is likely to result in a rush for shares. It is the first listing on the Uganda Securities Exchange (www.use.or.ug) since 2006 and the amount on offer is small, totalling 161,552,000 ordinary shares – 40% of the issued share capital – at a price of Uganda Shilling (UGX) 45 or 2 US cents per share.
The total amount is UGX7.3 billion (US$3.7 mln).
The sale of shares is by the Government of Uganda, which says the price is subsidized. Ugandans get priority and the minimum purchase is 2,000 shares.
According to the NIC website: “This IPO marks yet another milestone in the deliberate use of the divestiture process in Uganda as a core catalyst for the development of the capital markets in the country.
“The Government of Uganda has to-date privatized 6 of Uganda’s successful public companies by way of IPOs. The companies namely are; – Uganda Clays Limited (UCL), British American Tobacco Uganda Limited (BATU), Bank of Baroda (U) Limited (BOBU), DFCU Limited, New Vision Printing and Publishing Company Limited (NVL), and Stanbic Bank Uganda Limited (SBU).”
4% of the issued shares has been reserved for the permanent employees of NIC at the IPO price.
In June 2005 the Government had sold 60% of the shareholding in NIC to Industrial and General Insurance Company Limited (lGI) of Nigeria (www.iginigeria.com), a leading West African insurance company, after a bidding process. NIC was set up in 1964 by Act of Parliament.
According to a report in The East African, Joseph Kibuuka, a research and market development officer at Crested Stocks and Securities, says: “This IPO is not the most exciting we have had. But the market was hungry for something to reignite it and NIC has provided that.”
One question mark in investors’ minds had been outstanding debts of UGX17.7 billion accrued in handling Makerere University’s Deposit Administration Plan – a staff retirement scheme – between 1996 and 2005.
January 4th, 2010 by Tom Minney
An initial public offering (IPO) for Uganda’s National Insurance Corporation (NIC www.nic.co.ug) will be launched on 14 January and close on 5 February, according to a report on the Business Daily website (www.businessdailyafrica.com).
Mr Hassan Mohammed, outgoing joint managing director of Dyer and Blair Investment Bank (www.dyerandblair.com), was reported as saying the listing on the Uganda Securities Exchange (www.use.or.ug) will be on 25 March, after a share allotment on 9 March. Mr Japheth Kato, executive director of Uganda’s Capital Markets Authority, is said to have been satisfied with the preparations, including the prospectus.
It will be another step forward for the USE which has dynamic management but a relatively small economy. The bourse has 11 listed firms, compared to 55 listings on the Nairobi Stock Exchange and 15 on the Dar Es Salaam bourse, nearly half of them in recent years. Uganda Clays and New Vision Printing and Publishing Company were listed on the USE in 2008. Kenyans have also invested in recent IPOs, including Stanbic Uganda.
Other IPOs expected in Uganda in the coming months or years include Sheraton Hotel, Kinyara Sugar Works, Barclays Bank Uganda and Kakira Sugar Works, says the newspaper.
Kenyan companies including Kenya Airways, East Africa Breweries, Kenya Commercial Bank and Jubilee Holdings are cross-listed on all three exchanges while Equity Bank is listed in Uganda and Nairobi.
NIC is 45 years old and Uganda’s biggest underwriter. On offer is 40% of the share capital (amounting to 161.6 million shares), priced a USh45 per share (US$0.02/ 2 cents). In 2005, the Government of Uganda sold a 60% stake to Industrial and General Insurance Company Limited of Nigeria.
The listing has been delayed for 3 years due to disputes with the staff association of Makerere University over a pensions fund managed by NIC. This has not yet been fully resolved, according to the report.
The Government has been working with the Uganda Insurers Association to increase insurance penetration which is behind other countries. It has been receiving dividends from NIC. but says it is selling its stake in order to boost development of Uganda’s capital market.