20 April 2017

Tanzania: Why Vodacom Share Offer Has Been Extended

Photo: The Citizen
Vodacom building in Tanzania.

Dar es Salaam — Vodacom Tanzania Plc is extending the deadline for its initial public offering (IPO) by three weeks as it seeks to give local investors more time to take part in the share sale.

Vodacom seeks to raise Sh476 billion through sale of its 560 million shares at a price of Sh850 each in the ongoing IPO as the telecommunication firm offloads a 25 per cent stake to the public in compliance with the Electronic and Postal and Communications Act (EPOCA), 2010 as amended by the Finance Act 2016.

The IPO, which officially started on March 9, 2017, was due to close yesterday (April 19) ahead of the company's listing at the Dar es Salaam Stock Exchange (DSE) on May 16. Foreign investors cannot take part in the IPO but can invest after the listing.

"Following consultation with the government and the respective investment communities including Members of Parliament, groups of civil servants and officials of the constituent member organizations of the Tanzania Federation of Cooperatives, we have requested and received approval from the CMSA (Capital Markets and Securities Authority) to extend the offer period by three weeks to Thursday, 11th May 2017," Vodacom Tanzania director of corporate affairs and public relations Rosalynn Mworia said yesterday.

Signs of a possible extension for the IPO deadline started to show on Wednesday last week when Vodacom Tanzania Plc, CMSA, DSE along with brokers, conducted an awareness seminar to Members of Parliament (MPs) in Dodoma whereby the lawmakers expressed their interest in the share sale, but requested for more time.

Some MPs asked the Speaker of the National Assembly, Mr Job Ndugai, to look into how they could be facilitated with loans to take part in the IPO.

CMSA director of research, policy and planning Nicodemus Mkama said in Dodoma on Wednesday that they would consider extension for the MPs but asked them to keep on communicating.

Orbit Securities general manager Juventus Simon told The Citizen yesterday that with three holidays within the IPO period, it only made sense for them to extend the period.

"The MPs expressed their willingness to take part in the IPO... we have also consulted with a number of retail investors - who are at the epicenter of domestic empowerment as required by the EPOCA - and they were more than willing to take part. Unfortunately, there were holidays as the deadline approached, necessitating the extension," Mr Simon - whose company was the IPO's lead transaction advisor - said.

Apart from Karume Day on April 7, the IPO's activeness may also have been dropped as investors shifted their attention to Easter holidays.

With Monday and Friday reserved for holidays, then Tanzanians - who tend to become more active in various important undertakings as the deadlines approache - had only yesterday to buy the shares. According to Zan Securities Limited CEO Raphael Masumbuko, the IPO has attracted a lot of enthusiasm among retail and institutional investors during the past five weeks, hoping that the trend would continue.

"With the number of investors increasing, it was only fair that the deadline had to be extended. We are hopeful that many more will come," he told The Citizen yesterday.

With the extension, allotment of shares is now proposed to take place from May 19, while listing at the DSE is scheduled for June 6.

Vodacom's Sh476 billion is expected to be the highest amount to have been attained through IPO in the history of Tanzania.

In 2012, a total of Sh121.51 billion was attained when East African Breweries Limited (EABL) issued a placement of its 20 per cent stake in Tanzania Breweries Limited Group (TBL).

Similarly, National Microfinance Bank's IPO - which was issued in 2008 - sought to collect Sh63 billion through the sale of the state's 21 per cent stake. It was however oversubscribed by 42 per cent.

In 2006, Tanzania Portland Cement Company (TPCC) - which trades as Twiga - issued an IPO in which it sought to raise Sh23.4 billion worth of capital from the public through the sale of authorized 53,975,900 shares. However, the IPO was oversubscribed when a total of Sh92.5 billion was raised.

In 2009, CRDB issued an IPO, seeking to raise Sh18.8 billion through the sale of five per cent of shares for the Danish International Development Agency.

Mr Simon, however, exuded confidence that the money will be raised.

"We are hopeful that it will be oversubscribed as we anticipate an increased number of both retail and institutional investors during the coming three weeks," he said.

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