Business
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 digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
Security, infrastructure boosted in revised budget
In the latest revised draft budget, security, energy and the transport sector have been allocated more resources in the 2015/2016 budget....
War pushes S. Sudan
Soaring inflation and a likely currency collapse are adding to South Sudan''s woes after 17 months of civil war....
Struggling BlackBerry announces new round of layoffs
BlackBerry is laying off workers around the world as the struggling smartphone manufacturer tries to make its device business profitable....
Women empowered financially through steel
Lydia Mwesigwa is a marketer by profession who at first didn't have any interest in owning a steel manufacturing plant apart from earning a salary from it....
UIA to host Kampala private equity and venture capitalist conference
Uganda Investment Authority (UIA) will host the first Kampala private equity and venture capitalist conference from 24th to 25th June 2015....
China
Li Hejun, the wealthiest man in China until this week, saw his fortune by as much as $15 billion in a half-hour as the stock in his company, Hanergy Thin Film Power Group, fell by nearly half....
Should politicians be banned from addressing religious gatherings?
Yes
No
Can't Say
follow us
subscribe to our news letter