USE welcomes Umeme listing
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By Stephen Ilungole

THE Uganda Securities Exchange (USE) has clarified that the expiry of power distributor Umeme’s concession in 2025 will not affect its listing on the local bourse.

Joseph Kitamirike, the USE chief executive, explained over the weekend that the remaining 13 years were many for the new investors to earn a return on their investment.

“You are buying into a company in performance for the next 13 years. A person buying shares today may not have them in 13 years,” Kitamirike pointed out.

“But what does the expiry of the concession mean? It means the life of the company is ending. You liquidate and divide assets. But it should not prevent it from being listed. That also assumes that the Government will not renew the concession,” Kitamirike said.

Kitamirike was also optimistic that the initial public offering (IPO) of Umeme will boost activity at the bourse.

Umeme, owned by Actis Capital, a UK-based emerging markets investment assets giant, with an asset base of over $4b, is looking to raise capital on the Uganda and Nairobi stock exchanges in October to finance the expansion of the country’s electricity distribution network.

Although the percentage of the shares to be listed is not known, Kitamirika said the law requires a minimum of 20%.

He also disclosed that Actis was using the IPO for its partial exit in Umeme, through reducing its shareholding in the company.

“But at the same time, it is good for Umeme to become a public company because the initial challenges it faced have reduced,” he explained, adding “because Umeme is the face of electricity sector, it is now good for the public to participate because where there was darkness, there is light.”

“We hope the arrival of Umeme will enable the market to rise. We also expect more activity from the listed banks, which are recapitalizing as required by law. There will definitely be more activity,” Kitamirike said in an interview.

He observed that Umeme’s arrival will change capitalisation and the volumes at the bourse, while banks will affect the traded volumes.

“We will have new investors and existing ones releasing some of their ownership to acquire new shares. That should help generate some level of activity,” Kitamirike noted.

He pointed out that the IPO would create up to 1,000 new small and big (institutional) shareholders. Kitamirike explained that their 2011/2016 strategy is focusing on attracting private listings.

“For us, Umeme has led the way. We have always complained that we do not have any local private company listed. I am happy Umeme is on board,” he said.

He noted that the regulator had already approved a new growth enterprise segment, which is designed to help companies that are not organised to the level of Umeme to list.

 
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