Shares of Bank of Kigali (BK) rose significantly at their Rwanda Stock Exchange (RSE) debut, signalling investors confidence in acquiring equity stake in the country’s largest lender after its successful Initial Public Offering (IPO) last month.
The shares closed at Rwf190 in yesterday’s trading, 52 percent above the Rwf125 IPO price. BK became the second domestic company to list its shares on the seven month old stock market.
“The transaction and new capital comes at the right time when the bank is focusing on building a great bank and retaining the leading position in the market,” The Bank’s Board Chairman, Lado Gurgenidze, said
BK sold 300.3 million shares during the IPO in a bid to raise funds that will be used to expand its network, increase the loan portfolio and consolidate its leadership position in the increasingly competitive banking industry.
“Through great service and 45 percent of the shares being in the hands of the public, we have all the reasons to be optimistic that it will be very liquid on the secondary market,” he added.
While investors continue to bank on the booming financial sector and BK’s anticipated growth, the Executive Director of Capital Markets Advisory Council (CMAC), Robert Mathu, warned of the risks that could affect trading on the secondary market including demand, inflation, and interest rates.
“Its hard to predict the price trend of BK shares, but I like how investments into private equity transactions is now relatively steady and hope to drastically increase the trading volumes on RSE,” he said on the sidelines of BK’s official listing ceremony at Kigali Serena Hotel.
The listing of BK also marks the fourth listing on the RSE following the cross-listing of Kenya Commercial Bank and Nation Media Group.
The nascent bourse has experienced tremendous growth following its launch as an over the counter market in 2008.
Statistics indicate that Rwf651m worth of bonds were traded in 2008 compared to Rwf8.3b of equity stock traded as of August 31, 2011. The total turnover currently stands at Rwf831.351 billion.
“The volume increased by the entrance of Bralirwa and we hope with BK, it will explode which critical for trading,” Mathu said.
RSE has banked its hopes on the 40 per cent set aside to international institutions because they buy with long term prospects to be part of the growing economy.
“These ones don’t just buy and dump, but they influence better performance of the company through discussing their business modules,” Mathu noted.