Archive for the 'Listing' Category
June 3rd, 2011 by Tom Minney
I have the honour to be published on the opinions section of the Royal African Society website and the article can be seen along with their excellent blogs here. I also reprint the article, which is meant to spark debate, and I welcome your comments – is it time for change and what is the way forward?
“The wind of change” was Harold Macmillan’s famous 1960 phrase about Africans moving to political self-determination. Half a century later the world’s biggest securities exchanges are worrying who will survive a hurricane of globalization, technology and competition, but some of Africa’s capital markets still seem sheltered from the economic winds of change.
The giants of securities trading are slugging it out in a wave of mergers and acquisitions and London Stock Exchange (LSE) chief executive Xavier Rolet said: “In five years there will be three, four international exchange groups with global distribution capabilities”.
In the world of mega-bourses the LSE launched a £4.3 billion merger with Canada’s TMX Group of exchanges but a “Maple consortium” of Canadian financial institutions has launched a hostile bid, seeking to block the marriage. New York’s NYSE Euronext and Germany’s Deutsche Börse want a $9.5 bn union, but US stock exchange NASDAQ and its partner IntercontinentalExchange are offering $11.3 bn to snatch the New York bride. NASDAQ is reportedly worth $5.7 bn and worried it may become a takeover target if it stays single. Many other leading exchanges are busy with strategic transactions.
Africa however has not seen much change at least in the last decade. Some of Africa’s stock exchanges are making a few operational changes, but structural transformation is not on the agenda. The continent has a couple of world-class stock exchanges – in 2010 South Africa was rated the world’s best-regulated capital market – and three or four better exchanges with enough liquidity for international and big local institutional investors. The rest of the continent features a small regional exchange and more than 15 national stock exchanges where activity could drop to a few deals a day and liquidity is too small for the market to work efficiently or provide scope for minimum transactions for international investors. Some don’t even open their doors every working day.
Stock exchanges and securities markets evolved worldwide as the most efficient way to channel capital from savers to entrepreneurs, governments and others who can use it most productively, i.e. profitably. Savers with capital are more than eager to invest billions of dollars into Africa, dubbed the “final growth frontier” for its vast opportunities and favourable pricing. Meanwhile in Africa, entrepreneurs and governments are calling for billions in capital to build roads, rail, power, water and telecommunications/IT infrastructure up and down the continent and to transform farmlands, build industries and hopefully improve livelihoods sustainably through business.
Nationalist politics and comfort zones are among the factors holding back African securities exchanges, which have traditionally been seen as national institutions. Sovereignty has been more highly prized than liquidity and efficiency. In 2009 South Africa’s JSE Ltd sought to acquire a stake in the Stock Exchange of Mauritius (SEM) after two years of talks, but regulators blocked it. Nationalism about stock exchanges is not just an African concern, it is currently in the news in Canada and Australia.However, now technology is available to transform exchanges without losing national regulation or denting pride.
Some African exchanges are improving their own operations fast. The two NSEs – the Nigerian and Nairobi stock exchanges – have taken stern measures to improve governance, regulation and transparency. In Nigeria this included a morning in August 2010 with armed police on the Lagos trading floor after regulators fired the Director-General. Other exchanges such as Mauritius Stock Exchange (SEM) are noted for continuous improvements and innovation. However, only the Egyptian Exchange, the JSE (Johannesburg Stock Exchange) and SEM have attained the exalted membership of the World Federation of Exchanges.
In some countries trading in debt is improving faster than equity markets. Kenya’s NSE launched effective automated bond trading, backed by much improved settlement, and trading volumes and liquidity are soaring. The Government is responding with a deft series of issues that balance the domestic market and stretch it with long-dated 25- and 30-year bonds. Better maturity in the national fixed-income market enables lenders to offer locals long-term housing and other finance with paybacks over decades rather than a few years. Electricity company Kengen, telecoms operator Safaricom and others have raised hundreds of millions of dollars through bond issues, many aimed only at local savers. The overall effect on the economy is likely to be huge.
But change is coming slow to some African exchanges where liquidity is too small and action too slow. International investors complain that many don’t have enough trading to accommodate the minimum buy or sell amounts required and they lament the quality of market and business information and transparency. Coupled with the operational problems and uncertainties that dog local and international businessmen in many African countries, some are still “off the map” for investment.
London, New York and other international stock exchanges benefit if companies and bond issuers seek listings and cross-listings internationally in order to get closer to investors and sources of capital and because efficient marketplaces make their capital raisings more attractive to investors. London has a tradition as the world’s capital marketplace and the LSE’s Main Market lists 18 equities for trading that focus on Sub-Saharan Africa. In 1995 the exchange created the Alternative Investment Market (AIM) as an international marketplace for smaller, growing companies seeking growth capital, including early-stage and venture-capital, as well as more established companies. Sub-Saharan Africa scores 55 out of 3,000 listings, mostly mining firms, but also farming, finance and machinery.
NYSE Euronext Inc says trading in 16 African equities listed on its New York and European stock exchanges has boomed. Stefan Jekel, managing director for Europe, Middle East and Africa, says main activity stems from South Africa but interest in Africa is growing: “The volume (number of shares) traded has increased by factor of 12 over the last ten years to 7.9m shares, and the value is up by a factor of 21 times to $204m per day”.
London is to the fore when it comes to international Eurobond issues as African countries rush to issue sovereign debt and benefit while world interest rates are rock-bottom. Interest is also growing in African derivatives such as Exchange-Traded Funds (ETFs) available on London, New York and other international markets and one or two African markets. NYSE says the number doubled in 2009 to ten ETFs, six in Europe and four in New York, and they have over $1bn in assets.
It is an historic opportunity for Africa’s capital market structures. However much national exchanges improve, they need radical restructuring to create liquid and more efficient markets or they will be blown off the map by the winds of change.
Kwame Nkrumah (1909-1972) and many others transformed the continent driven by their vision of a mighty Africa that grew strong by unshackling the borders that colonial powers had drawn on maps. The African Union is founded to achieve regional and economic integration for Africa to take its rightful place in the world. Capital markets have an opportunity in that technology and proven models exist for African stock exchanges to pool trading while still maintaining national exchanges and regulation and being adaptable to meet local requirements.
Sunil Benimadhu, President of the African Securities Exchanges Association and CEO of SEM said in November 2010 that world investors see the continent as “a very promising investment destination with tremendous present and future growth potential”. African countries have achieved growth rates exceeding 5% in recent years after embracing fundamental structural reform programmes. The growth is set to continue but it must be fuelled with capital, skills and improvements in the investment and business climate.
African capital markets have an opportunity and a challenge.
Tom Minney is a consultant, speaker, financial journalist and editor of the blog www.africancapitalmarketsnews.com
June 3rd, 2011 by Tom Minney
South African private equity firm Paladin Capital (www.paladincapital.co.za) has listed its 76% subsidiary Curro Holdings (www.curro.co.za) on the JSE’s AltX on 2 June. Curro, which offers private schooling, aims to raise another R322.4 million ($48 million) through a rights offer after the listing, according to a news report on Fin24.com, in order to reduce the weight of debt on the balance sheet.
The rights offer will be partially underwritten as JSE-listed Paladin (PLD) will retain its majority stake and PSG Financial Services (www.psggroup.co.za), a diversified financial services firm which owns 80.6% of Paladin, will underwrite the offer. Previously Curro’s expansion was funded by debt finance provided via Paladin, including a 10-year loan of R73 mn ($10.8 mn) from the International Finance Corporation.
Curro was founded in 1998, with 28 learners receiving tuition in a church building in Durbanville. It has grown to over 5,500 learners at its 12 schools in the Western Cape, Gauteng, Mpumalanga and Limpopo, all in South Africa. It plans to add 40 more in the coming 9 years and each school requires R30 mn-R70 mn capital outlay.
Curro CEO Chris van der Merwe says: “The public education sector has a huge responsibility to supply enough schools for the ever-increasing number of children, and many state schools are becoming overcrowded. Curro Holdings can complement the public sector and ease the pressure by supplying affordable private school education for children aged 4 to 18.
“Our schools are staffed by trained and experienced teachers and our tuition fees are lower than those charged by high end, more expensive private schools. As a result, we have experienced sharp growth and there is ongoing demand for our schools,” he said.
Noah Greenhill, the JSE’s head of marketing and business development at the JSE, said the AltX gives an opportunity for good quality, high growth companies to raise capital to fund future growth. “Education is a critical element in the development of South Africa and AltX plays an important role in facilitating the growth and development of companies such as Curro.”
Last year Paladin paid R52 mn ($7.7 mn) to boost its stake in Curro to 76%. Paladin chairperson Jannie Mouton wrote in the annual report: “Without downplaying the other segments, education is an industry in which Paladin believes above-average potential exists. This is where management sees significant growth in the foreseeable future.”
He said Curro offered fees of up to 40% lower than its competitors: “Curro aims to be a high-quality, value-for-money alternative.” He pointed out that only about 3% of pupils attend private schools, while 22% of South Africa’s population received private healthcare. He said few new schools were being built in middle- and upper-income areas, and waiting lists at private schools were long.
Paladin’s annual report valued the 50% stake in Curro – before the latest additional 25% stake was acquired – at R100m, representing 9% of Paladin’s total R1.167bn. portfolio. Curro operated a loss of R300,000 in 2007, then had an after-tax profit of R300,000 in 2008, R1.9m in headline earnings in 2009 and R5.2 m in 2010. Mouton said profits would not rise fast while Curro was in a growth phase “due to the amount of leverage used”.
Advtech is the only private education company listed on the JSE has a market capitalization of R2.4bn. It is the owner of brands like Crawford Colleges and Abbotts.
Last year Paladin made an after-tax profit of R208 mn when it received R354 mn from the sale if its 123.47 mn shares in Namibian fast-moving consumer goods group CIC, also listed on the JSE, to Imperial Holdings. The compounded return was 64.8% over 4 years. It also sold its stake in Lesotho Milling for R26 mn after investing R21 mn and receiving R7 mn in dividends.
Paladin’s portfolio includes listed investments such as Capitec bank, the JSE Ltd and Steinhoff as well as unlisted investments such as Curro, empowerment investment group Thembeka Capital and Protea Foundry. Paladin spent R30 mn on another 10 mn shares in Petmin, R23 mn on another 17 mn shares in Erbacon and bought another 3.8% stake in Spirit Capital and provided R50 mn of debt funding so Spirit could acquire skin care and beauty distributor Annique and fashion accessory distributor Honey. It has also recently bought a 45% interest in Energy Partners.
Full details of the portfolio can be found in Paladin’s annual report to February 2011, downloadable here.
May 31st, 2011 by Tom Minney
Many foreign investors have investments in Africa but hold them in international custody in London or New York and perhaps wish to trade them on international securities markets such as London Stock Exchange or New York’s NYSE Euronext. They would choose to hold their equities in the form of Depositary Receipts, usually known as “American” (ADRs) if issued in the US, “Global” (GDRs) in London and there are DRs in several other countries including South Africa (SADRs).
The idea is that shares listed on an international exchange are transferred to a strong financial institution, who then issues a DR security which can be more easily traded on an international exchange or over-the-counter (OTC) market. BNY Mellon dominates the field but other issuers include JP Morgan Chase, Citi and Deutsche Bank. The total value of DRs traded in 2010 worldwide was $3.5 trillion, up 30% on 2009, and 89% of this trading was in the US.
Michael Cole-Fontayn, CEO of BNY Mellon Depositary Receipts (www.bnymellon.com), explained to African Capital Markets News that when institutional investors request, either for a capital raising or for more trading, BNY Mellon approaches the company and other stakeholders to set up a DR programme, usually under English or New York law. The details of the new DR security, including its currency, can be adapted to suit the international investors.
BNY Mellon holds the underlying security in the local market through a custodian, usually Standard Bank, while the newly issued DR clears and settles through the usual international clearing houses. An investor who has bought the shares in the local market can also approach BNY Mellon to convert them into DRs, which are often cheaper to own and easier to trade and settle.
When an investor holding a DR wishes to sell, he may first look for an international buyer for the DR. If not, his broker can find a buyer in the home market, then BNY Mellon would cancel the DR and deliver the shares for settlement in the local market. This can be done overnight if there is a time difference, but cancellation was suspended for Egyptian DRs when the Egyptian Exchange closed for two months in January-March 2011.
BNY Mellon currently offers DRs in shares in South African, Nigerian and Egyptian companies and offers indices based on the DRs. South Africa’s Anglogold Ashanti raised $705m through issuing DRs in New York in September 2010. Egypt’s Orascom Construction and Remco Tourism Villages created DR programmes for the US OTC markets, while Orascom Telecom traded $1.8bn of DRs on the LSE’s International Order Book (IOB) market. Four African companies – Malawi’s Press Corp, two Nigerian Banks and media house Naspers of South Africa – have GDRs listed on the LSE’s Main/Professional Securities Market.
Mary Gormley, Vice President at BNY Mellon Depositary Receipts, said that one big advantage was the speed of clearing and settlement and reduced costs. For instance, Oando plc, listed on the Nigerian Stock Exchange then cross-listed on the JSE in 2005. Movements between share registers could take 40 days, while equivalent changes using the DR system would be much quicker. She believes the DR programme will grow, with growth businesses in Kenya and Ghana interested and Senegal, Togo and Zimbabwe also considering it: “DRs come out of a need for capital raising.”
May 31st, 2011 by Tom Minney
The London Stock Exchange (www.londonstockexchange.com) has long been a global centre for capital, particularly where African investments are concerned. It is also the world centre for Eurobonds and several leading African equities are traded in London. There are several reasons to come to London, either through listing or cross-listing, including being closer to investors and sources of capital such as funds and investment trusts and also because investors may find it more attractive to invest in companies that are listed on a well-known and recognized stock exchange. A few international exchanges, including London, Toronto and Australia, are also known as centres for world mining equities and attract specialized listings..
The LSE’s Main Market lists 18 equities for trading that focus on Sub-Saharan Africa. These are mostly South African firms covering food, industrials and mining and the history began with AECI in 1937 and Tongaat-Hulett in 1939. The main board also includes Zimbabwe’s hotel group Meikles, Hwange Colliery and financial services firm NMBZ; Kenya’s Kakuzi food products and Zambian miner ZCCM. All listings after NMBZ (1997) were incorporated outside Africa, including Channel Islands Jersey and Guernsey, Bermuda and UK. The list doesn’t include the “London Five” – Anglo American, BHP Billiton, SAB Miller, Old Mutual and Investec –of giant firms who caused controversy when they moved from South Africa. Africa is now a small part of their operations.
AIM, the LSE’s international market for smaller, growing companies, was created in 1995 for businesses seeking growth capital, including early-stage and venture-capital, as well as more established companies. Sub-Saharan Africa scores only 55 among the 3,000 worldwide companies. The list is dominated by mining companies, many incorporated in UK, offering investors exposure to gold, diamonds, gemstones, uranium, platinum, coal, iron and other metals and minerals spread across Africa from South Africa to Liberia and Sierra Leone. Also on offer are financial services, farming and fishing, water, computer services, real estate, industrial machinery and alternative fuels. Most of the countries of operation are English-speaking, but others include Mozambique and Somalia.
March 17th, 2011 by Tom Minney
South Africa’s securities exchange the JSE Limited (www.jse.co.za) increased Group revenues by 9% to R1,255 million ($178 mn) from R1,156 mn in 2009. The exchange described it in a press release as “a fair year in challenging conditions in 2010” and said it focused on operational projects and responding to changes in the global exchange industry. Results were driven by strong performances from the cash equity market, information products sales and commodity derivatives.
CEO Russell Loubser has also announced that he will stand down as CEO at the end of 2011, having taken the post in 1997. His place will be taken by Nicky Newton-King, who has been deputy CEO for eight years.
Commenting on the 2010 results, Loubser in the release: “The past 15 years have been a time of extraordinary development for the JSE. The diversity of revenue streams in the business reflects the fundamental nature of its transformational journey. The JSE’s ability to remain competitive in our fast- changing industry has been maintained through continued growth in product range and trade volumes, as well as tight management of costs while still maintaining world-class standards.”
JSE operating costs before net finance income rose by 8% to R879 mn (2009: R810 mn) resulting in a net profit after tax of R378 mn (2009: R366 mn). Much of the cost increase can be attributed to costs related to the JSE’s large IT projects, which required increased staff numbers. The JSE has no borrowings and R1,046 mn in cash reserves (2009: R921 mn).
The JSE Board has been relatively unchanged for the past decade but CEO Russell Loubser has decided to stand down as CEO with effect from 31 December 2011. JSE non-executive chairman Humphrey Borkum said: “Russell joined the JSE as CEO in 1997 and has been responsible for significant and highly successful innovations. This is not the time to praise or thank Russell for his enormous contribution as he still has 9 months left before leaving the JSE. The time for farewells will come later. I am delighted to announce that the Board has appointed Nicky Newton-King as CEO with effect from 1 January 2012. This appointment is well deserved and will ensure an orderly transition.”
• Growing trading volumes pushed up equities trading revenue again, up 5% year-on-year to R325 mn in 2010 (2009: R310 mn). The number of daily equity trades increased 13% year-on-year (2010: 94,656). The JSE implemented a new equities billing model to incentivise increased trading in March 2010.
• The interest rate market also increased revenue, partly because of including 12 months of revenue, compared to only 6 months before since it was June 2009 when the JSE acquired the Bond Exchange South Africa (BESA). Like-for-like, revenue fell 10% to R35 mn (2009: R38 mn). Bond market volumes in 2010 were driven partly by foreigners entering the SA bond market, with net purchases valued at R58.6 billion (2009: net positive R24 bn). Interest rate derivatives volumes continued to grow off a low base. The JSE continues to discuss the model and ways forward with all market participants.
• In the equity derivatives market, the number of futures contracts traded rose in value and number, but revenue fell slightly owing to a changed product mix. Trade in international derivatives – that is, derivatives on companies listed on a stock market offshore – grew particularly strongly. The team continues to bring new products to the market. To encourage a move to a central order book and to stimulate greater activity on the equity derivatives market, the JSE introduced the maker-taker billing model in July 2010.
• The commodities derivatives market performed well in 2010 with a 12% rise in commodity derivative contracts to 2.1 mn. This is largely owing to a rise in volumes traded in its oldest product set – agricultural product derivatives – but also aided by the expansion of trade into new hard commodities products thanks to a licensing agreement with the CME Group.
• Revenue from the issuer services division which does listings including equities, bonds and other instruments, rose to R86 mn (2009: R79 mn), mainly owing to the inclusion of 12 months of revenue from the interest rate market. The number of new company listings on the JSE rose to 14 in 2010 (2009:10) including one on AltX and one on the Africa Board. Loubser comments: “Listings remained subdued, an experience shared with most other members of the World Federation of Exchanges. Notably, 2010 saw the listing of Wilderness Safaris – the second Africa Board listing.”
• Trade in currency derivatives for 2010 was slightly down on 2009 levels. In 2010, the JSE added contracts on the Swiss franc and Chinese yuan.
• The Information Products Sales division focused on new markets and grew revenue by 7% to R117 mn (2009: R109 mn). The team also expanded its product range and adjusted some fees to give more retail clients access to data.
The global financial services industry is changing fast and the JSE, haveing already changed enormously, has to keep moving. Big technology projects are central to the JSE’s focus for 2011. Other strategic initiatives include:
• Building consensus on the growth of the spot and derivatives interest rate markets;
• Growing the client and product range in all market segments, concentrating particularly on how to bring over-the-counter (OTC) trade on-market and on how to encourage more foreign activity on the JSE derivatives exchange;
• Unlocking the opportunities for investors on the African continent by attracting listings on the JSE’s Africa Board as well as creating indices on African stocks that allow investors to track the performance of top issuers across the continent.
Revenue projections are not possible in the stock exchange industry, since they depend on trading volumes, which are driven by market conditions. Loubser says: “In a globally competitive environment, markets with strong regulation, solid infrastructure and thriving institutions will be better positioned to attract sustainable capital flows. The recognition by the World Economic Forum (WEF) Global Competiveness Report 2010-2011 that South Africa’s securities exchange regulation is the best in the world reflects our transformation from a single product equity exchange to a well regulated fully horizontally and vertically integrated exchange.”
Non-executive directors Gloria Serobe and Wendy Luhabe have indicated that they will not make themselves available for re-election at our AGM in April 2011. Chairman Borkum says: “After having served 10 and 8 years on the Board respectively they have both made significant contributions to the JSE’s affairs and I thank them most sincerely”, says Borkum.
Jonathan Berman resigned during the course of the year due to his other business commitments. He joined the Board as an alternate director following the BESA merger.
Lastly, in terms of accepted practice, it has been decided to shrink the number of executive directors on our Board. Borkum says: “Leanne Parsons and John Burke, who are senior and highly respected executives of the JSE, will both stand down as executive directors at our AGM in April.” They will continue to contribute to the Board as alternate directors.
February 28th, 2011 by Tom Minney
Tunisie Telecom (www.tunisietelecom.tn) has cancelled plans for a joint initial public offering on the Paris and Tunis stock exchanges after consultations with trade unions following several changes of Government in recent weeks and the resignation of the former president, Zine al-Abidine Ben Ali.
Tunisie Telecom is the incumbent telecommunication network and service provider and offers fixed, mobile and satellite telephony services and ADSL services to residential and business subscribers through five Internet Service Providers.
Tunisia’s official TAP news agency on 10 Feb quoted a company statement: “Following discussions with trade unions, Tunisie Telecom and the union have reached agreement … to cancel all procedures for listing Tunisie Telecom on the stock exchange and to halt all the privatisation programmes of Tunisie Telecom.”
Earlier in February Secretary of State for Communication Technologies Sami Zaoui said plans for the offer were suspended pending consultations. Workers at the company had been threatening industrial action, but this was dropped after the news that the listing had been cancelled.
The Tunisian Government holds 65% of the shares, with the rest held by Dubai’s TECOM Investments and Dubai Investment Group. It had aimed to be the first Tunisian company to list on NYSE Euronext Paris and on Bourse de Tunis (www.bvmt.com.tn).
In mid-December Tunisie Telecom had filed a 555-page reference document with regulators Conseil du Marché Financier in Tunis and Autorité des Marches Financiers in France.
February 14th, 2011 by Tom Minney
Africa’s newest stock exchange is the Rwanda Stock Exchange (RSE), launched on 31 Jan to start trading the shares of brewer Brasseries et Limonaderies du Rwanda BRALIRWA (www.bralirwa.com). The exchange replaces the Rwanda-Over-The-Counter (OTC) market which has operated since 31 Jan 2008.
Prime Minister Bernard Makuza launched the RSE and said it is a key development milestone, according to news reports: “Building a strong financial system is a key element of Vision 2020; the Government will continue to facilitate the development of the capital market.” Finance Minister John Rwangombwa said Government had sustained a stable macroeconomic environment over the years and laid the appropriate environment to attract both domestic and international investments.
The RSE was formed as a dormant company after a March 2007 decree that established the Capital Markets Advisory Council (www.cmac.org.rw) to set up and regulate the transitional process towards a full stock exchange. CMAC had run the ROTC and would now be transformed into a Capital Markets Authority to act as regulator. The legal framework aims to comply with standards of the International Organization of Securities Commissions (IOSCO).
Bloomberg agency reported that BRALIRWA shares surged 62% when trading began on the RSE on 31 Jan. It quoted Robert Mathu, Executive Director of CMAC, saying the stock first traded at 220 Rwandan francs ($1.67).
The Rwandan Government aimed to raise RwFr 22.1 billion (US$37.3 million) from selling its 30% stake in BRALIRWA. Of this 128.6 mn shares, or 25% of the company, were sold in the public offer at RwFr 136 francs (22.9 US cents) per share. The Government said this was a discount to the valuation of RwFr 170 each share, in order to encourage buyers.
Government was to sell the remaining 5% of its shareholding to Heineken Group, which earlier bought 70% of the brewer from the Government. BRALIRWA sells beers such as Amstel, Guinness, Mutzig and local brand Primus and has an estimated 95% market share and also bottles Coca Cola products. Net annual revenues are reported at around $93 mn.
The offer reportedly attracted $80 mn in bids. MBEA Brokerage Services Rwanda was lead transaction advisor. The IPO campaign included investor education, TV and radio ads and Rwanda’s first research reports.
Co-transaction advisor Renaissance Capital sold 60% of the international tranche offering to international and local investors across several continents. There were share orders from Africa, Europe and the United States and the international portion was oversubscribed more than 5 times.
The shares ended the week on 11 Feb at RwFR 189, according to the market report from CMAC.
Future share offers
Bloomberg reports that the Government is discussing the sale this year of its 10% stake in MTN Rwanda, 55% owned by South Africa’s MTN Group Ltd. Minister Rwangombwa said another shareholder with a 35% stake will probably also offer its shares in public offer.
State-owned Banque de Kigali, Rwanda’s biggest lender by assets, will sell shares in May 2011 and cement-manufacturer Ciments du Rwanda Ltd., Rwanda Commercial Bank (BCR) and insurance company SONARWA are among other companies partly owned by the State who may sell stock through the RSE.
Contract to Kenya’s central depository
Rwanda contracted Kenya’s Central Depository and Settlement Corporation (www.cdsckenya.com) for a year. The company said it will train staff of the central Bank National Du Rwanda (BNR). The bank aims to procure and install a system to run a central depository for the equity market using its own staff by the end of the contract. CDSC has handled the BRALIRWA IPO and many of the biggest share offerings in East Africa, including Safaricom.
Kenyan depositories and share registrars are competing to offer their services more widely in the region.
CMAC’s Mr Mathu told East African Business Week that the law establishing Capital Markets and the law regulating the market were to be published before end of January.
Previously the Government owned majority shares in the dormant RSE, but now it has reportedly reduced this to “at least 20%”. The private sector, including stockbrokers, holds the majority. Mr Mathu said: “We would like to see a stock exchange that is going to be pro-business, active and capable of providing a very efficient service to the investors both domestic and international.” Stockbrokers have welcomed their inclusion in the ownership of the stock exchange saying it will hold them responsible for protecting the bourse.
According to statistics from CMAC, bonds worth RwFr 26 bn have been issued and listed for trading on the ROTC, including 7 treasury bonds (RwFr 25 bn) and one Commercial Bank of Rwanda (BCR) corporate bond of RwFr 1bn. Bonds traded on the secondary market have so far generated a turnover of RwFr 654.4 mn. Two Kenyan companies, Kenya Commercial Bank (KCB) and Nation Media Group (NMG), are cross-listed.
January 10th, 2011 by Tom Minney
Results have recently been released of the share offer of insurance company Alliance Assurances (www.allianceassurances.com) on the Algiers Stock Exchange (www.sgbv.dz). The share offer was open from 2 November until 1 December and was oversubscribed, with private individuals flocking to receive the shares. Alliance aims to be the first private company to list on the Bourse d’Alger. It was one of the last IPOs or public offerings of shares on the African stock exchanges in 2010.
According to the official announcement from the Bourse d’Alger total of 1,804,511 shares were subscribed, the full amount offered, at a price of 830 Algerian dinars (USD11.17) each.
IPO Offer allocation
The offer was allocated as follows:
Section A: 33.3% (600,000 shares) for individuals with Algerian nationality: received 1,338,346 shares of 74.17% of the total. There were a total of 5,374 applications of which 5,284 each applied for less than 3,591 each and were allocated in full, while the remaining 90 applicants got 3,591 or 3,592 shares each.
Section B: 28.5% (514,286 shares) for institutional investors: received 181,625 shares or 10.07%. There were 4 applicants of which 3 each applied for less than 60,240 and were allocated in full and one applied for more and received 60,240 shares.
Section C: 28.5% (514,285 shares) for Algerian companies: received 186,022 shares or 10.31%, all who applied were allocated.
Section C2: Subscription Right, allocated 90,226 shares, received 100% of the allocation, all who applied were allocated.
Section D: 2.37% (42,857 shares) for insurance brokers and were allocated 3,635 shares (0.2%), all who applied were allocated.
Section E: 2.37% (42,857 shares) for the company’s employees across the 35 Algerian provinces, of which 4,657 shares were subscribed, 0.26%, all who applied were allocated.
The financial adviser for the offering is Nomad Capital (www.nomadcapital.com – website still says “under construction”), with PriceWaterhouseCoopers and Hadj Ali.
According to a previous report, General Manager Hacen Khelifati said that the company would also sell 30% to an unnamed European company in a separate transaction, which awaits regulators’ approval. He was also reported as saying that the company would benefit from government incentives to encourage listing including a 5-year tax holiday on profits from the operation in order to raise new capital for development and to help revitalise the Algiers Bourse.
Alliance plans to use the capital to meet new regulatory requirements and to set up 2 new subsidiaries:
• A real estate asset manager to maximize value for Alliance and third-party investors;
• A venture capital vehicle dedicated to investments in sectors related to the insurance field.
Alliance Assurances already has two subsidiaries: ATA, and a dedicated IT engineering subsidiary named ORAFINA.
Alliance Insurances is a joint-stock company created in July 2005 and says it is now a multiline insurance company with more than 300,000 insured clients and total net premiums in 2009 of 2.8 billion Algerian Dinars with a net profit of 312 million Algerian Dinars, providing a 39% return on equity, according to a press release.
About the Bourse d’Alger
The Société de la Gestion de la Bourse des Valeurs Mobilières was set up in 1997 under a 1993 law and started trading in 1999. The bourse website says the listed equities are Egh el Aurassi (state-owned hotel) and Saidal (state-owned pharmaceutical company) while the listed debt securities are Algerie Telecom, Spa DAHLI and Sonelgaz securities. Trading takes place twice a week, on Monday and Wednesday mornings for two hours.
December 22nd, 2010 by Tom Minney
Tunisie Telecom (www.tunisietelecom.tn) has announced the first stage of registration with the aim of listing on the Tunisian stock exchange Bourse de Tunis (www.bvmt.com.tn) and NYSE Euronext Paris (www.euronext.com). It filed a 555-page reference document filed with regulators Conseil du Marché Financier in Tunis (www.cmf.org.tn), and also with French financial markets regulator Autorité des Marches Financiers (www.amf-france.org) on 17 December.
The filings are the first steps towards an Initial Public Offering (IPO) of shares on the Tunis and Paris stock exchanges, subject to market conditions and approval of the IPO prospectuses by the two regulators.
Tunisie Telecom is the incumbent telecommunication network and service provider and offers fixed, mobile and satellite telephony services and ADSL services to residential and business subscribers through five Internet Service Providers. It is 65% owned by the Government, but in May 2006 a consortium of Dubai’s TECOM investments and Dubai Investment Group acquired a 35% shareholding.
On offer will be a reported 20% of the shares, half each from the Government and from TECOM-Dubai, according to a useful story by Reuters newsagency, citing Tunis bourse Chief Executive Mohamed Bichiou. The listing could be planned for the first quarter of 2011.
Tunisia’s population is about 10 million and it has an open business climate and moved fast to adopt third generation 3G mobile technology. The telecoms market has expanded this year, after France Telecom started fixed and mobile operations. In September 2010, Tunisie Telecom was awarded the second 3G licence reportedly after paying about $80 million. It joins France Telecom’s local unit Orange Tunisie which had the first 3G licence.
Reuters reports that in November, Egypt’s Orascom Telecom sold its 50% stake in another Tunisian mobile operator Tunisiana for $1.2 billion. The buyer was a consortium that included Qatar Telecom’s Kuwaiti unit Wataniya and which already owned 50% of Tunisiana.
The IPO will be the biggest on the Tunis exchange in recent years. Tunisia’s emerging equities market has been increasing its profile this year, and this will be enhanced by the Paris dual-listing, Reuters reports that the previous foreign listing by a Tunisian firm was on Morocco’s stock exchange.
The reference document includes IFRS accounts for the years to December 2007-2009 and provisionals to September 2010.
December 7th, 2010 by Tom Minney
The Zimbabwe Stock Exchange (www.zse.co.zw) snapped up its first new listing since 2007 on 29 November when Padenga Holdings Limited was admitted as the 77th listing. This year there have been 2 listings described as “reverse takeover listings”, TN Financial Holdings Ltd acquired Tedco Limited (January) in order to get listed on the ZSE and Interfin Holdings took over CFX Financial Services (May) and with it CFX Bank.
First day trading in Padenga was reported at 2.7 million shares, of which 1.8 million were book-overs by Imara Asset Management. The highest offer was US$7 cents, but trade opened at US$5c.
Padenga was created in September when diversified manufacturing conglomerate Innscor divested of its crocodile skins division Niloticus operated as a wholly-owned of Innscor, a, which has diluted its shareholding in the company from 100%. Innscor transferred assets and liabilities of its former subsidiary to the new public company in exchange for 541,593,440 of Padenga’s issued ordinary shares. These are to be distributed to Innscor shareholders by way of a dividend in specie, which technically means acquisition by way of share swap in lieu of cash distribution.
It has 3 farms in Kariba and supplies about 33% of the world’s demand for large, high-quality crocodile skins. It earns 92% of its revenue from tannery exports to Asia and Europe and 8% from meat shipments to Asia. Its main clients include leading global brands such as Gucci. Padenga in its prelisting statement (Padenga prelisting statement online, click here) reported that gross turnover up at $11.8 million for the year to 30 June (up from $10.2 million in 2009) and operating profit before depreciation and amortization of $1.3million (up from $69,879). The company is well covered by the excellent www.africanfinancials.com and www.africanir.com.
Padenga CEO Gary Sharp was reported in local media: “I am extremely optimistic about the opportunities that the listing brings us in terms of our intentions to grow the business and pursue related ventures using the experience, skills and IP (intellectual property) we have developed locally.
“We are now producing a size and quality of skin that commands premium prices and this largely separates us from the level of the market that is impacted by global market trends and fluctuating skin prices. We are predicting sustained revenue and profit growth over the foreseeable future and have every confidence in achieving these results.”
The global financial crisis had a negative impact on the international exotic skins market as both demand and prices declined. Subsequently, the company had to de-stock, which resulted in the business incurring a fair value loss during the financial year.
Another rumoured listing could be LonZim Plc, a 24.61% associate company of AIM-listed Lonrho, which announced on 29 November that it has raised £4,987,904 (before expenses), by issuing 17,813,944 new ordinary shares of £0.0001 each at 28p per LonZim share. This was principally conducted amongst new and existing institutional shareholders in LonZim. Lonrho participated to maintain its percentage shareholding of 24.61% by subscribing for 4,384,011 new LonZim Shares at a cost of £1,227,523. It is reported to be aiming to raise a further US$5 million for capital expenditure through a rights issue, with all funds to go to expanding existing operations.
On 2 November it was reported that Whetstone Minerals, listed on Canada’s Toronto Stock Exchange and concentrating on gold mining in Zimbabwe, was seeking a secondary listing for its shares on the ZSE, and this is reported still to be coming this year.
ZSE CEO Emmanuel Munyukwi was reported as saying also that Kingdom Financial Holdings would be one of 3 new listings (including Padenga) before the end of the year. He said several foreign companies had inquired about listing on the bourse.