30 November 2010

Rwanda: Banks Offer Loans to Buy Bralirwa Ipo Shares

Commercial banks are willing to offer loans to potential investors willing to buy shares in the ongoing Bralirwa Initial Public Offer (IPO), Business Times has learnt.

Though there are no special offers on the cost of funds, the banks, including, Kenya Commercial Bank (KCB) Rwanda, Bank of Kigali and Fina Bank say loans will be provided on demand.

This follows the official launch of the sale of government's 25 percent stake in the brewery, early last week ,to the public.

"We are not advertising a general "Loan Scheme" for this purpose but will consider applications from existing customers on a case by case basis," Steve Caley , the Managing Director of Fina Bank told Business Times last week.

However, Caley hastened to add that the loans would be provided at normal rates for any charges and interest and subject to terms and conditions.

Each of the 128, 570, 00 ordinary shares costs Rwf 136 of the offer running till December 17, 2010 last week Tuesday (November 23).

The government plans to raise Rwf17.5 billion from the IPO, who shares have been offered at 20 percent discount from the actual valuation to encourage investor participation and activate the secondary market.

In a separate interview, Maurice Toroitich, the Managing Director of KCB, which is one of the receiving banks of IPO, said that while the bank has not allocated specific amount to customers who want to buy shares, the bank will lend money to all customers who "qualify" based on their lending criteria.

"The most important thing is that the customer in their own right should be able to afford the repayment and should not be relying on the stock as the source of repayment although we shall hold the stock as security," Toroitich said.

The Banker added that interest on the loan will be charged according to the bank's base rate currently at 16.25percent.

"This is a secured loan therefore carrying a relatively lower risk margin compared with unsecured loans. We shall also levy a minimal processing fee." he said.

Investors hoping to buy a share will have to first fill in application form that requires them to fill in their identification and contact details.

The minimum per application form which costs Rwf13, 600 is 100 shares.

Government sold the remaining 5 percent of its shares in Bralirwa to Heineken International for $7.8 million, raising the total privatisation value to more than $37.3 million.

The privatisation of Bralirwa through the capital market is part of government's broader strategy to divest from companies it owns shares to facilitate the development of capital markets and to increase the alternative sources of long-term capital for business entities.

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