Bank of Kigali (BK) plans to sell some of its shares to the public through an Initial Public Offering (IPO), at the end of this month.
The offer represents 45 per cent of the bank’s shares and is expected to be open to investors of all nationalities. BK, Rwanda’s largest bank, will become the second company in the country to effect an IPO after Bralirwa.
Bralirwa’s IPO was overwhelmingly oversubscribed by 174 per cent, generating $80 million against $29.5 million projected for the 25 per cent government shares that were put on the market last year.
The strong response recorded in Bralirwa IPO was an indication of the investors’ strong confidence in the prospects of the Rwandan economy. In his budget speech, early this month, the Minister of Finance said the government plans to raise Rwf25 billion in the financial year 2011/12, by selling its shares in BK and MTN Rwanda.
By selling the shares, the Government will not only supported the growth of the capital markets in the country, but will also help the ongoing privatization programme.
With the revenues generated through the IPOs set be used to develop key sectors like infrastructure, agriculture and ICT, that require heavy capital investment, the process will, in turn, help boost economic growth.
Other local companies should be encouraged to raise funds through the capital markets, as an alternate source of capital other than banks.
The process will increase investment and saving avenues, hence facilitating public participation in the growth of the economy.