Vo­da­com Tan­za­nia ex­tends IPO to give lo­cal in­vestors more time

Some 25 per cent of the com­pany’s shares should be taken up by lo­cals

The East African - - MARKETS - By AL­LAN OLINGO The Eastafrican

Vo­da­com Tan­za­nia Plc, which re­cently of­fered 25 per cent of its shares in an ini­tial pub­lic of­fer­ing, has failed to meet the set thresh­old, rais­ing ques­tions about the abil­ity of Tan­za­ni­ans to take up the shares of the coun­try’s big­gest telco.

The IPO, of­fered in March 9 and clos­ing on April 19, has not yet raised the Tsh560 bil­lion ($248.5 mil­lion) ex­clu­sively al­lo­cated to Tan­za­ni­ans.

On Wed­nes­day, Vo­da­com Tan­za­nia, a sub­sidiary of Voda­fone Group, ex­tended the of­fer­ing for three weeks giv­ing ad­di­tional time for the shares to be bought.

“This ex­ten­sion will help en­sure full par­tic­i­pa­tion by re­tail and in­sti­tu­tional in­vestors, who have re­quested more time,” said Ros­alynn Mwo­ria, the Vo­da­com Tan­za­nia cor­po­rate af­fairs and pub­lic re­la­tions di­rec­tor. “We thank all Tan­za­nian in­vestors who have par­tic­i­pated in the ini­tial of­fer to date, and look for­ward to wel­com­ing new share­hold­ers.”

The fail­ure by the telco to raise the tar­geted cap­i­tal is sim­i­lar to the 2011 Pre­ci­sion Air IPO.

That year, the pri­vately owned air­line is­sued an IPO seek­ing to raise Tsh28 bil­lion ($16.5 mil­lion) to ex­pand its routes and pur­chase new air­craft, but only man­aged to raise Tsh11.84 bil­lion ($5.25 mil­lion).

In the case of the Vo­da­com of­fer­ing, mar­ket an­a­lysts cite over­pric­ing of the com­pany’s net as­set value. The Tsh476 bil­lion ($212.8 mil­lion) of­fer is about 25 per cent of the com­pany’s worth of Tsh1.9 tril­lion ($844.9 mil­lion).

Ac­cord­ing to Lau­rean Malauri, chief ex­ec­u­tive of Or­bit Se­cu­ri­ties, the Pre­ci­sion Air IPO was un­der­sub­scribed largely be­cause in­vestors were not com­par­ing the com­pany with an­other air­line, but rather with Tan­za­nia Brew­eries Ltd (TBL), which ap­peared to be more at­trac­tive at the time.

TBL, a Sab­miller sub­sidiary, is listed on the Dar es Salaam Stock Ex­change. It is among the bourse’s top movers, with a share price of Tsh12,000 ($5.3) as of last week.

Ex­perts say that if the Vo­da­com IPO fails, the com­pany may have to re­think the 25 per cent lo­cal own­er­ship from which other East Africans have been locked out.

“Eq­uity mar­kets need time to de­velop, and 25 per cent is rather am­bi­tious, as there is lim­ited eq­uity in lo­cal hands wait­ing to be in­vested. That’s why you see the share­hold­ing struc­ture of some large or­gan­i­sa­tions favour­ing wealthy and po­lit­i­cally con­nected in­di­vid­u­als who have ac­cess to cap­i­tal,” said Ge­orge Kale­baila, di­rec­tor for tele­coms and In­ter­net of Things in Africa at IDC.

An­a­lysts ad­vise the reg­u­la­tors to con­sider open­ing up the of­fer to for­eign­ers if it will still be un­der­sub­scribed af­ter the three­week ex­ten­sion.

But the IPO’S lead ad­vi­sor, Or­bit Se­cu­rity, said they will main­tain the re­quire­ment of the law and there will be no for­eign in­volve­ment.

Ju­ven­tus Si­mon, Or­bit Se­cu­rity gen­eral man­ager, told The Eastafrican that they are con­fi­dent the thresh­old will be met in three weeks.

He de­clined to dis­close how much the of­fer has net­ted so far, say­ing that sub­scrip­tions are go­ing on and the com­pi­la­tion of the raised funds will take place af­ter clo­sure.

The IPO blocked for­eign­ers from buy­ing the 25 per cent stock un­til it is listed on the DSE in early June.

“This is a le­gal mat­ter. It is stip­u­lated in the do­mes­tic own­er­ship laws,” said Cap­i­tal Mar­kets and Se­cu­ri­ties Au­thor­ity spokesper­son Charles Shir­ima.

The South Africa-based par­ent com­pany, Voda­fone South Africa, is only listed on the Jo­han­nes­burg Stock Ex­change.

Vo­da­com Tan­za­nia was launched in 2000, and the coun­try is the group’s se­cond big­gest mar­ket with 13.4 mil­lion ac­tive sub­scribers as at De­cem­ber 31, 2016.

Pic­ture: File

A Vo­da­com re­tail out­let.

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