KIGALI - The country’s first Initial Public Offer (IPO) Bralirwa has generated solid interest from both local and international investors, with preliminary results of the offer indicating that it will be oversubscribed.
This follows the expiration of the deadline of the offer that will see government’s 25 percent stake in country’s sole brewery and soft drinks manufacturer, sold to the public.
While the government had planned to raise Rwf17.5 billion from its 128,570,000 shares that have been on offer since November 25, preliminary results show that the offer is likely to be oversubscribed by more than 240 percent.
“The success of the Bralirwa IPO is a huge boost to the country’s investment climate and can only set the ground for even better IPOs of Rwandan companies in the near future. The results of the IPO are a vote of confidence by investors to the economy,” John Rwangombwa, the Finance Minister said, yesterday, during a press briefing announcing the closure of IPO offer.
The offer was priced at Rwf136 per share, reflecting a discount of 20 percent from the actual valuation to encourage investor participation and activate the secondary market.
“We expected to get a success story but it has been more successful than we expected. We are not surprised; Bralirwa is a solid company and people have confidence in this economy,” Rwangombwa observed.
The minister also emphasised that the privatisation of Bralirwa through the capital market is part of the government’s broader strategy to divest from companies it owns shares to facilitate the development of capital markets and increase the alternative sources of long-term capital for business entities.
“I would like to encourage those who did not apply to prepare to participate at the Rwanda Stock Exchange, once the company is listed and its shares start trading on January 31 2011.”
According to the IPO Prospects ,while 35 percent will go to retailer investors from the domestic investors’ pool including other EAC citizens, incase of oversubscription in the retail sub-pool, priority will be given to Rwandan citizens for up to 60 percent of the offer shares allocated.
In addition, all applicants that have not been allotted in full the number of offer shares applied for will be refunded an amount equivalent to the value of the offer shares not allotted.
According to allotment policy, 70 percent of the offer has been reserved for domestic investors; while foreign investors were allocated 30 percent.
This includes 35 percent for retailer investors, 5 percent to employees and distributors of Bralirwa, 15 percent for institutional investors from Rwanda and 15 percent to EAC institutional investors.
Announcement of the offer and risk allotment results will be made public on 18th January next year while shares will start trading on the Rwandan Stock Exchange on January 31.