30 November 2012

Uganda: UMEME Lists On Stock Exchange

Photo: New Vision
Umeme officer doing maintenance work.

Ugandan investors get a second opportunity to acquire UMEME stock as the power company lists on the Uganda Securities Exchange today. The listing is expected to recharge activity on the share markets.

"We have achieved a significant milestone. We are delighted that the IPO (initial public offer) was 137% over subscribed, despite the rather challenging global market environment," said Patrick Bitature, the UMEME chairman.

The company sold more than 622 million shares to the public, employees and international investors at sh275 per share price. Arthur Nsiko, a securities trader with African Alliance Securities, said the listing of UMEME is likely to spur activity on the bourse after a series of price mismatches slowed trading.

The all-share index slowed to sh1,180.84 by the close of business on Tuesday, from sh1,182.61, while the all share index was sh193.65 for two straight days, an indication of the need for greater investor participation on the market.

New Vision, Uganda's leading daily, was dominant in the market, trading 160,000 shares for sh96m at sh600 per share. "The purchase of New Vision stock was mainly by institutional investors that were impressed with the profit margins at the annual general meeting," Nsiko said.

The company registered a 15% growth in turnover, from sh61.8b to sh71b, while profit before tax rose 17%, from sh4.7b to sh5.5b for the year ended June 2012. A price mismatch between demand and supply on the Stanbic Bank and the Uganda Clays counters led to no trades on the two counters by the close of business on Tuesday.

Shareholders were selling at sh25, leading to a four million outstanding offers basket against sh20 that investors are ready to pay, leaving 0.6million bids outstanding.

A similar situation existed on the Uganda Clays counter, where outstanding bids of 427,930 shares did not match supply of 373,504 outstanding offers at sh40 against demand at sh35 per share.

"Investors looking to buy into Uganda Clays shares are focused on the medium to long-term prospects of the company after management was changed. It will take some time before the company issues a dividend," Nsiko said.

There is gradual climb in demand on the Baroda counter, with 51,723 shares in the outstanding bids basket with supply still at Zero.

A price mismatch at the National Insurance counter has increased outstanding bids to 8,862 shares, against 379,253 outstanding offers at the sh40 per share price. The other counters recorded minimal activity on the day.

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