Proceeds from the sale of government’s shares in Bralirwa, after it lists on the Rwandan bourse later this year will support the national budget, a senior official has said.
This is in line with government’s commitment to mobilizing domestic revenue to finance its projects.
“The proceeds from this transaction will be included in the national budget for next financial year starting July 2010- it will be part of our internally generated (domestic) revenues,” Vincent Munyeshyaka, Chairman of the Capital Market Privatization Committee (CMPC) said on Friday.
Government is set to float 25 percent of its stake in Bralirwa on the Rwanda over-the Counter market, (ROTM) later this year, making it the first Initial Public Offer (IPO) in Rwanda’s history. Five percent would be directly sold back to the Heineken Group.
The market currently lists three treasury bills, a BCR corporate bond and one cross listing from Kenya Commercial Bank Group (KCB).
Without divulging further details concerning how much governments expects to raise from the equity market, Munyeshyaka said that the lead transaction advisor of the IPO is evaluating the company to come up with its market value.
“Right now we do not have any clear idea of what the price will be but at the end of the process, the lead transaction advisor will come will help us to come up with the proposal and then the client (government) will determine the offer price,” he said .
Recently, a consortium made of MBEA Kampala, MBEA Security Service, Kigali and RENAISSANCE Capital of Nairobi won a bid to act as the lead transaction advisor for the landmark IPO.
Dyer and Blair Investment Bank had been selected as the lead sponsoring broker for the IPO while African Alliance also of Kenya was chosen as the co-sponsoring brokers chosen for the same transaction.
Sven Piederiet, the Managing Director of Bralirwa despite the company‘s impressive performance recording a net profit of Rwf5.6 billion in 2008, Heineken Group , the largest share holder of Bralirwa with 70 percent will not sell its shares on Rwanda OTC market.
“Normally when you go to the stock market you want more capital, you need capital finance the expenditure whatsoever. That is not the primary interest of Heineken,” Piederiet said.
“Heineken as a shareholder is actually interested in Rwanda, interested in the company and its long-term potential. Instead of selling shares, going out of business; Heineken wants to stay in business and wants to expand business,” Piederiet said.
Robert Mathu, the Executive Director of Capital Markets Advisory Council (CMAC), observed that by selling its shares, government has a specific objective of developing the local capital market.
“One of the ways to develop a capital market is to make sure that products are available in the market and the interest of government as a shareholder in Bralirwa to sale its shares to the public,” Mathu said.
Government is targeting four more companies which include; cement manufacturer CIMERWA, insurer SONARWA, Commercial Bank of Rwanda (BCR) and MTN Rwanda—a subsidiary of MTN South Africa.
Statistics from CMAC indicate that the Rwanda bourse which has mainly attracted treasury and corporate bonds has up to date registered a total turnover of only Rwf 13, 952,300 (only about $25,367) from the cross-listing of Kenya Commercial Bank shares.