Money Markets
Oil exploration in Turkana. Kenyan investors will be eligible to invest in Australian oil firm Swala Energy. FILE
By John Gachiri
In Summary
Swala Energy management is optimistic of soon
making the delayed initial public offering (IPO) after the Dar regulator
completed reviewing its prospectus and gave conditions including
engaging an underwriter.
Kenyan investors will be eligible to invest in the
Australian oil and gas exploration firm that is prospecting in Nyanza
and Tanzania, in the first upstream listing of the region.
It plans to accede to the Dar es Salaam Stock Exchange (DSE) through the IPO.
The company said the Capital Markets
and Securities Authority (CMSA), the industry regulator, had gone
through the prospectus and made minor recommendations which when met
will give Swala the green light to list.
“CMSA has now reviewed the prospectus in its
entirety and had one comment, which we are now addressing. Separately,
it also wanted to see the IPO underwritten and we will be putting that
underwriting in place over the coming days. Once that is done then I
assume we shall be clear to proceed,” Swala chief executive David
Mestres Ridge told the Business Daily.
Kingdom Securities, Co-operative Bank’s
brokerage arm, is the local partnering broker for the IPO which
initially targeted to raise between $2 million (Sh174 million) and $3
million (Sh261 million). It was to open in March through the sale of
some 3.2 million shares.
Swala was to raise the money through selling a
stake in its Tanzanian subsidiary Swala Oil & Gas Tanzania (SOGT)
Ltd in which it has a 65.13 per cent stake.
Other shareholders are Swala Trust with a 9.3 per
cent stake, Erncon Holdings (9.83 per cent) while other shareholders own
the remaining 15.73 per cent stake. The lag in approval from the CMSA
has resulted in Swala looking for funds through debt.
“As a consequence of the delay in receiving CMSA
approval, SOGTP raised $1.17 million (Sh102 million) through the
issuance of convertible notes to new and current investors,” said Swala.
The IPO will also result in some Sh218 million worth of shares being set aside for communities where it is operating.
Funds
“In parallel, we have also been putting in place
the local trust structure into which we shall transfer the shares that
we currently hold for the local community. Once that is finalised then
we shall transfer 7.5 million shares into the trust. At the IPO these
would have a value of some $2.5 million (Sh218 million) and will be
managed for the benefit of the communities in our areas of operations,”
said Dr Ridge.
The explorer is raising the funds to improve working capital and buy more exploration licenses.
In Kenya, Swala is exploring for oil in Block 12B
located in Nyanza, which it jointly owns with Tullow Oil of the UK and
an undisclosed firm that recently bought a 25 per cent interest in the
block for $36.6 million.
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