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Rwanda: Country's First IPO Set for May
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East African Business Week (Kampala)
24 March 2008
Posted to the web 24 March 2008
Phillip Nabyama & David Mugabe
Kampala
Buyers should hold onto their cash as the Rwandan government readies to sell its stakes in various companies this May.
The sale of government stake, according to Mr. Henry Gaperi, the chairperson of the country's Capital Market Advisory Council (CMAC) has been pushed forward from April because the month, being a season when national commemorations like the genocide memorial are conducted, experiences low business activity.
"Government has made a decision to privatise its part of shareholding through the capital markets," Gaperi told East African Business Week after the signing of a memorandum of understanding (MoU) to admit Rwanda as a member of the East African Member States Securities Regulatory Authorities (EASRA).
Mr Robert Mathu, the executive director of CMAC said the Rwandan government presented a list of the companies that they wished to privatise.
"We {CMAC} decided to select the most profitable of them and they fall in six sectors," Mathu told East African Business Week.
The MoU signed at the 25th consultative EASRA meeting at Kampala's Imperial Royale Hotel provides a mechanism for fostering market integration of the East African capital markets and establishes a basis for cooperation and mutual assistance among the members.
Rwanda launched its bourse, Over The Counter (OTC) on 31 January this year, subsequently becoming the fourth after Kenya, Tanzania and Uganda.
Burundi is yet to launch. The bourse has only been trading in bonds which have overwhelmingly been oversubscribed.
The commencement of equity trading will bring Rwanda at par with the other three bourses that have been conducting stock trading at their different exchanges. It will also add another equity market to the region, essentially increasing the market and portfolio options for the different investors especially those that may want to suck into virgin markets with exponential potential like Rwanda.
The privatisation secretariat will work closely with the CMAC to look into requirements for companies to list shares at the OTC market.
"We should be able to come in with a new IPO every two months. We believe its going to be over subscribed. We have seen this in the bond market," Gaperi told this newspaper.
The country's finance minister, Mr. James Musoni, recently said that government's stake in several private companies would be listed for sale in preference to the usual privatisation processes.
The government of Rwanda owns minority shares in Rwanda's only brewery, BRALIRWA, Cement Company -Cimerwa, local insurance company-SONARWA, MTN Rwandacel, Rwandatel, Banque Commerciale du Rwanda (BCR), FINA bank and many others.
Gaperi said that the phasing out of government ownership was very important. He revealed that his country was now prepared for private companies that want to sell to the public.
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With Rwanda now admitted into East Africa's capital markets, Gaperi said that there was more confidence for Rwandans to buy shares in companies across the region for; they now feel part of the family.
"Somebody in Kigali could now be more willing to buy shares in Safaricom," the CMAC chair said.
The IPO for Safaricom, East Africa's most profitable company with equity value of Ksh200 billion (US$2.9 billion) commences this Friday (March 28) through to April 23 across East Africa. There are about 10 billion ordinary shares on offer.
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