DSE primary offer oversubscribed by 377 pct

ABDUEL ELINAZA

The DSE Chief Executive Officer, Moremi Marwa.

DAR ES SALAAM Stock Exchange (DSE) initial public offer elicited robust investor response after it was oversubscribed by 377 per cent bringing in new challenges on allotment of funds and reimbursement.

As predicted, the IPO received an overwhelming response from investors who put up 35.77bn/-, almost five times the amount earmarked of 8.25bn/-, including 10 per cent of green shoe.

“This (amount collected) is equivalent to 377 per cent in excess of the targeted capital… this brings in a fresh challenge of refunding because of the size of oversubscription,” The DSE Chief Executive Officer, Moremi Marwa, told reporters in Dar es Salaam.

He said the redistribution of share would base on DSE promise made on prospectus on allotment pro-rata against the number of applicants.

“The reason for raising this capital tied us to not taking all amount raised, but we are thinking of slightly increasing our green shoe option percentage. “For allotment pro-rata, we are considering to give full amount for individuals who bought less than 5.0m/-, but this is subject to approval from the regulator (Capital Market and Securities Authority),” Mr Marwa said.

He said DSE would formally request the regulator to consider individual investors who purchased not more than 5.0m/- worth of shares to get full subscription amount. Out of 35.77bn/- collected, 30 per cent or 10bn/- came from domestic investors while foreign investors subscription was 25.77bn/-.

“Due to data domestic investors oversubscribed the IPO. But the pro-rata would not look at favouring foreigners or domestic investors, rather individual retail investors,” Mr Marwa said. Orbit Securities Chief Executive Officer, Laurean Malauri, said the oversubscription manifested that there are enough liquidity in the economy to facilitate company growths. “We are feeling very good…

This is a good sign that investors have trust on the bourse… this is pure business, not favouritism,” Mr Malauri said. Orbit said a small portion of investors, 26, used mobile phone application to buy 18m/- worth of shares.

“The number is small but we are still encouraging people to continue using this channel,” Mr Malauri, whose brokerage firm is a sponsoring broker of the IPO, said.

CRDB Bank’s Security Services Manager Hemed Masumai said they received more than 3,200 applications but even after the deadline would-be-investor wanted to buy. “If we accepted all the application, even after deadline, we would have collected some 50bn/-.

After the deadline we received about 1,600 or 50 per cent of on time applications,” Mr Masumai said. He said even Nairobi Securities Exchange wanted to buy DSE. The bourse put on offer 15 million shares at 500 each to raise 7.5bn/- with a green shoe of 10 per cent.

The stock brokers said the oversubscription was expected since the amount wanted to be raised was small compared to investors’ appetite.

DSE wants to use the IPO proceeds for enhancement of its core-operating system, introduction of new products and services and strategic and operational purposes. The bourse self-listing is expected to take place on July 12 and refunds at the end of this month