Tanzania bank IPO opens doors to Kenyan investors

Wananchi queue to open CDS accounts ahead of Safaricom IPO in 2008. FILE

By John Gachiri

Tanzania has opened Maendeleo Bank’s initial public offering (IPO) to Kenyans who now have just under a week to apply. The IPO at the Dar es Salaam Stock Exchange (DSE) targets to raise around Sh216 million through the sale of eight million shares at TSh500 (Sh27) each.

The offer is a departure from the past when the country that maintains a tight grip on its capital account treated Kenyan, Rwandese and Burundian investors as foreigners.

“Yes, it (the offer) does include other East African investors,” DSE chief executive Moremi Marwa told the Business Daily.

Maendeleo Bank, a Christian-based micro-lender, will also be breaking new ground by becoming the first firm to be listed on DSE’s Enterprise Growth Market, a platform for listing small firms.

If there is an oversubscription, Maendeleo Bank can issue an additional 1.2 million shares and raise an extra Sh32.4 million in exercise of the ‘green shoe’ option. Some seven million shares were however subscribed in advance leaving just 972,000 up for grabs.

The micro-lender is raising funds for expansion in an offer that opened mid-August and ends next Tuesday. Results of the offer are expected next week.

Tanzania Securities Ltd, one of the agents, said that the level of Kenyan interest would be known after CRDB Bank, the receiving bank releases figures.

Kenyan investors have in the past shown interest in companies listed on the DSE, Uganda Securities Exchange and the Rwanda Stock Exchange, but this has largely been driven by receptiveness of the market regulators.

Kenya, Rwandan and Ugandan regulators have treated East African Community investors equally in past IPOs, but Tanzania has taken a more protective stance. The Tanzania Breweries Ltd offer of 2011 gave locals priority over other regional investors while regulators in the country did not allow locals to participate in the Safaricom IPO of 2008.

Regional regulators under their umbrella body the East African Member States Securities Regulatory Authority (EASRA), have however made gains in levelling the ground.

The regulators have made proposals to treat investors in all member states equally, issue regional listings for both bonds and stocks and have a shared set of industry standards.

The Capital Markets Authority (CMA) said the drive for a larger market was meant to make it easier to access funds for massive infrastructure projects.

“Well integrated regional markets will allow issuers to tap regional capital markets to raise capital.
Increased fund raising capacity will provide a means to meet the costs of major infrastructural development and commercial ventures,” said a statement by CMA acting chief executive Paul Muthaura when the regulator released draft rules on harmonisation of the regional market.

Listing on the DSE is expected to take place on October 21, but the promoters of the offer will not be able to sell their shares.

United Evangelical Mission, ELCT-Eastern Coastal Diocese, Tumaini Dar-es-Salaam College, directors and other large shareholders will hold onto their shares until 2016.