UMEME shares selling fast
Publish Date: Oct 21, 2012
UMEME shares selling fast
The shares are also expected to be cross-listed on the Nairobi Stock Exchange later
  • mail
  • img

By Samuel Sanya

INVESTORS are taking up the UMEME stock at a faster pace despite fears on the energy utility’s concession expiry, and concerns over the initial public offer (IPO) price.

Stanbic Bank, the transaction advisor and lead receiving bank, on Monday confirmed the oversubscription for the 46% stake allocated to international investors, hardly three days since the stock hit the primary market.

“There is a lot of interest in the IPO from the public and the price is not too high for investors,” Dan Edoma, a securities analyst with African Alliance, the lead sponsoring broker, said yesterday.

Critics have pointed to UMEME ’s losses in the recent past, the ailing power distribution network it inherited that requires huge investments to correct, the fact that the utility has only 13 years left on its concession and the relatively high price of sh275 per share.

“Sh275 looks high for an IPO share price compared with Stanbic which was at sh70, but that was about six years ago,” some investors noted.

Individual investors will take up 20% of the company’s IPO stock, institutional investors 25%, international investors 46%, while 9% will go to UMEME employees and directors.

The companies abridged prospectus shows that investors are required to open electronic accounts and purchase a minimum 1,000 shares receiving 100 bonus shares before the IPO closes on November 7, before the listing on the Uganda Securities Exchange (USE ) on November 30. 

The shares are also expected to be cross-listed on the Nairobi Stock Exchange later.

Patrick Bitature, the UMEME chairman, pointed out in the share prospectus that proceeds from the share sales will be used to settle loans to reduce the debt burden.

“We are excited about the strong growth potential for UMEME . We believe the growth outlook for the Ugandan economy will continue to drive the demand for electricity,” he said.

“The generation capacity of the country has increased significantly with the commissioning of Bujagali hydropower dam. The additional smaller generation projects will support the expected increment in electricity demand,” Bitature added.

Charles Chapman, the UMEME managing director, allayed fears over the expiry of the 20-year concession in 2025, saying the law allowed them to apply for a further 20-concession extension.

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact

  • mail
  • img
blog comments powered by Disqus
Also In This Section
Business urged to embrace apps
FEWER than 1 in 5 Ugandans have access to formal lending or borrowing and rural Ugandans are left to fend financially for themselves...
Woman arrested for impersonating URA staff
A 40-year-old woman has been arrested over alleged impersonation. Roy Rukundo, a resident of Nabbingo in Wakiso district is accused of impersonating Uganda Revenue Authority (URA) staff with intent to extort money....
BAT tobacco giant paid bribes in east Africa
British American Tobacco paid bribes to officials in east Africa, including two members of a convention created under the World Health Organization (WHO) to combat smoking, according to a BBC investigation airing on Monday....
Govt  allocates sh8bn for skills training
Government has announced that it will allocate more funds to Enterprise Uganda to train more Ugandans in business, managerial, marketing and communication skills to run their own enterprises, according to the state minster for Finance, David Bahati...
Human resource training:  A missing link in cooperatives
Strategic human resource education and training remain a key missing link in the ongoing movement to revive co-operatives fully, a co-operative consultant has said....
Black Friday online shopping rivals stores in US
The closely watched survey said that about 151 million people shopped either in stores and/or online over the long weekend in the United States...
Do you think Uganda is winning the fight against AIDS?
Can't Say
follow us
subscribe to our news letter