Tanzania:Why firms' IPOs struggled this year

ABDUEL ELINAZA

THE market experiences for the first time firm initial public offers (IPOs) struggling to realise intended amount in this year unlike previous ones.

The challenges, emerged since Dar es Salaam Stock Exchange (DSE) inception, forced authorities to extend duration, but still IPOs were not oversubscribed. Vodacom was fully subscribed while TCCIA Investment was poorly subscribed.

In previous years, Mkombozi Bank IPO went in a record in 2014 after subscription reached 75 per cent but was within time while others were oversubscribed with no time extension. Orbit Securities Managing Director, Juventus Simon said the extension of one IPO to another was not based on common factors rather different scenarios.

“Each IPO had a separate reason different from others—some was timing, while other awareness, size of IPO and changing of laws and regulations mid-IPO,” Mr Simon told Daily News yesterday.

The MD of leading brokerage firm in the country said Vodacom IPO was historical large in size at 476bn/- and the government wanting more ‘wananchi’ to participate and was “achieved successfully.”

Speaking on the on-going Maendeleo Bank secondary offering of 10.56bn/- that was extended for a month; he said the bank industry is walking on a tight rope hence “slowing down investors’ participation decisions.

” Also, Mr Simon said, “the end year timing is not good for IPOs because people are concentrated on coming holidays and early January family obligations.” Similarly, Zan Securities Chief Executive Officer, Raphael Masumbuko said first and fourth quarters are not a good period to launch an IPO.

“TCCIA Investment suffered after launching their campaign in quarter one—the timing was not friendly. “And at that time of [TCCIA Investment IPO] the market was eagerly waiting for Vodacom offer,” Mr Masumbuko said. TCCIA IPO managed to collect 1.0bn/- against 45bn/-.

Zan CEO added that investors also anticipated that other telecoms—Tigo, Airtel, Halotel, TTCL, Smart and Zantel—would launch their IPO according to Electronic and Postal Communications Act (EPOCA) 2010.