Walter Wafula
5 August 2008
Citizens of Uganda's neighbouring countries could miss the opportunity of reaping wealth from the impending National Insurance Company Initial Public Offering, if the company doesn't consider them as local investors.
Mr Jim Mugunga, the Senior Public Relations officer at the Privatization Unit, the body in charge of privatizing government corporations, told Business Power that the size of the upcoming IPO at Uganda Securities Exchange will not call for regional participation.
"Preparations for the IPO are going on well and we believe it's a small one that cannot be extended to the region. We want to ensure that the return on investment that our investors get is satisfactory," Mr Mugunga said in a phone interview, on August 1.
He declined to reveal the number of shares that NIC will issue to the public arguing that, the subject is still under discussion.
"We cannot disclose the number of shares that will be offered because that is still subject to discussion," he said. But what is well known is that the government which owns 40 per cent of NIC will offload all its shares to the public. The upcoming public offering follows the sale of 60 per cent of government's share, to Nigeria's leading insurance firm General Insurance Plc (IGI), in 2005, for Shs6.2 billion.
Last week, a weekly newspaper reported that the deal required IGI to sell 9 per cent of its 60 per cent stake to the public, within one year of sale but this has not been done yet.
"It is not unclear at this stage to how much the government intends to raise from the sale of its shares, but financial analysts say 40 per cent of the country's largest insurance company is about Shs4 billion," the newspaper said.
Mr Mugunga however raised potential investors' hopes by saying that in future, NIC will make an offering that will be worth calling for all East Africans to make invest.
"In the future, we will bring bigger offers to all East Africans," he said. In an interview, Mr Japheth Katto, the Chief Executive officer of Capital Markets Authority, said CMA was wooing NIC to make the offering to the whole region to carry on a practice pioneered in June by Safaricom, Kenya's leading mobile telecommunication and East Africa's most profitable company to-date. Safaricom issued 10 billion shares, a 25 per cent stake of the Kenyan government's holding, worth $800 million.
The offering aroused extreme interest that resulted into an oversubscription of 532 per cent and a share allocation of 21 per cent- the lowest that has ever been made in the region. But Mr Katto commended the offering to the region.
"It was a good decision for the Kenyan government to allow that Safaricom be open to all East African. It was a very large offer and we didn't anticipate that it would be oversubscribed," he said.
"We are hopping and urging that NIC treats East Africans as the same because this is what we have been calling for."
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