I&M Bank Rwanda shares start trading amid limited supply

Trading on the Rwanda Stock Exchange. I&M Bank Rwanda shares closed at Rwf105 ($0.12) on March 31, on their first day of trading, with just over 100 shares traded PHOTO | FILE | NATION MEDIA GROUP 

By KABONA ESIARA

In Summary

There were bids worth seven million but no offers, a sign investors may be waiting for the share price to appreciate further.

RSE chief executive Celestine Rwabukumba said that the listing is likely to increase trading activity on the stockmarket as investors seek cheap bargains.

I&M Bank Rwanda shares closed at Rwf105 ($0.12) per share on Friday, on their first day of trading. The initial public offering price a week ago stood at Rwf90 ($0.11).

Some 121,800 shares were traded on the Rwanda Stock Exchange amid supply concerns as investors in the primary market held on. At the close of the debut trading, the bank’s market value reached Rwf52.5 billion ($63.6 million).

This is a fair opening price. But the challenge we have is that investors in the primary market have held on to their shares causing a supply gap on the secondary market,” said I&M Bank Rwanda managing director Davis K Gathaara.

He added: “We do not expect institutional investors like the Rwanda Social Security Board [RSSB] and Kibo Capital Partners to release their share on the market soon. These institutions invest for the long term.”

I&M Bank Rwanda is a subsidiary of the Nairobi Securities Exchange-listed I&M Bank Holdings.

Kibo Capital Partners, a Mauritius based private equity management company is the biggest investor in the foreign pool, while RSSB is the biggest shareholder in the qualified domestic institutional investor’s pool.

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There were bids worth seven million but no offers, a sign investors may be waiting for the share price to appreciate further. Deal makers worry that holding onto the shares will further slowdown activity on the Rwanda bourse which has been bearish for two straight years.

In 2016, the turnover on the Rwanda bond and equity markets declined by 55.6 per cent to Rwf17.1 billion ($20.7 million), due to underperformance of most listed companies compared with the same period in 2015.

But chief executive of the RSE Celestine Rwabukumba said that the listing of I&M Bank Rwanda shares is likely to increase trading activity on the bourse as investors seek cheap bargains. 

“The listing today kick-starts the secondary trading activities of I&M Bank Rwanda shares on the RSE. The secondary trading is likely to stimulate market activities by offering investors more options,” said Mr Rwabukumba. “This listing will most likely attract new investors into the market especially considering that the shares were oversubscribed at the primary market."

Rwandans and East African citizens were allocated 60 per cent of the shares in the domestic pool. Other investors have the remaining 40 per cent.

At the close of the bidding offer period which ran from February 14 to March 10, at least 206,893,000 shares were applied for which is above the 99,030,400 shares on offer, representing 209 per cent.

The Rwanda government plans to invest the proceeds, valued at Rwf8.9 billion ($10.8 million), in constructing the Bugesera International Airport.

The Rwandan government hopes to pocket Rwf8.26 billion ($10 million) in earnings from the divestiture and a further Rwf459.98 million ($557,000) in dividend pay.

Claver Gatete, the Minister of Finance and Economic Planning said, “the successful sale programme of I&M Bank Rwanda Ltd which is part of the primary trading activity of the shares gives the Government of Rwanda the impetus to fast track the process of bringing more government shares to the stockmarket.” 

“The outcome of the primary share sale is a clear indicator of confidence that investors have in our economy,” Minister Gatete added.