Bank of Rwanda offers 3 million shares, Ugandans cautioned on the IPO

Jul 11, 2011

BANK of Rwanda is offering 3,000,000 shares at sh550 each in an initial public offer (IPO), which closes on July 29.

By David Mugabe

BANK of Rwanda is offering 3,000,000 shares at sh550 each in an initial public offer (IPO), which closes on July 29.

The instutition was the largest bank by assets at the end of December, with the Rwandan government owning 75% and the Social Security of Rwanda 25%.

It is also the most profitable bank in Rwanda, accounting for 72% of aggregate sector profit in 2009 and over 50% in 2010.

The Rwandan government is offering 133,467,400 ordinary shares (20%) and 66,837,000 newly-created shares or 25%.

Although the offer presents another cross-border investment opportunity for the East African Community region, it also highlights the challenges of a lack of a common currency during such transactions.

Investors from outside Rwanda have to pay for the shares in Rwandan francs. This is similar to the Kenyan Safaricom IPO that saw Ugandan investors lose money during re-conversion in the refund process.

“This is the normal process. The solution to this is an East African currency,” said Kenneth Kitariko, the African Alliance chief executive officer.

African Alliance is the lead-sponsoring broker.

“Investors should be aware of any losses that may arise due to cross-border dealings and currency fluctuations,” read a risk advisory notice from Crested Stocks Securities, a local brokerage firm. The listing of the bank is the only second local listing on the Rwandan market after beer company, Bralirwa.

“Looking at the first IPO, which was an eye-opener for most locals, this will attract more demand that is most likely to create shortage and, thus, push the prices up,” Crested Securities added.

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