Stanbic Bank comes to market
SHILINGS AND CENTS<br><br>On Thursday Stanbic Bank will start trading on the Uganda Securities Exchange (USE).
SHILINGS AND CENTS
By Paul Busharizi
On Thursday Stanbic Bank will start trading on the Uganda Securities Exchange (USE).
Industry players are expecting a flurry of activity on the Stanbic counter for the next few weeks and the results of last week’s allocation tell you why.
The Stanbic share sale expected to fetch sh70b but more than sh200b was realised in bids from more than 35,000 applicants. Stanbic will refund sh140b to bidders who did not get their full allocation.
But since Ugandan individual bidders were more or less guaranteed their full allocation as the prospectus pointed out, institutional investors were left with negligible amounts compared to what they bid for.
Institutional investors both local and international laid sh113b on the table but only came away with sh7b or 6% of what they asked for.
One can expect institutions to be the first on Thursday to try and snap up more shares.
It is not unreasonable to think that huge gains will be seen on trading day one.
However, of more interest to me is that Ugandan individuals were able to fork out sh35b for Stanbic shares. Of course, one did not have to look at Stanbic to realise Ugandans can mobilise resources for good causes – the weddings that go on every weekend are proof enough.
But this raises two basic issues.
One, it is sad that unlike Kenya, the Government does not have a portfolio of many viable companies to offload on the exchange to capture this appetite for share offers.
In Kenya last year after the massive oversubscription of power generator, Kengen, the Government offloaded more shares from its Mumias Sugar Mills while the private companies Scangroup and Eveready jumped in with offers of their own.
This year, the Kenya government has already lined up reinsurance company, Kenya-Re and there are strong indications that Nairobi will offload some of its interest in the extremely successful cellular network operator, Safaricom, which it owns with UK telecom giant, Vodafone.
And secondly, as a result, we have lost a golden opportunity to capitalise on the momentum that has been created by the Stanbic offer to create new shareholders.
Currently, there are under 10,000 shareholders on the USE but with 15,000 subscribers to Stanbic, one can expect a few thousand more Ugandan shareholders.
Asset owners have a different outlook on life from non-asset holders.
Asset owners are unlikely to be anarchists and rabble rousers so the more shareholders the better for national stability.
So that aside, what happens when the share price shoots through the roof in the next few weeks?
Everybody is within his rights to sell his holding and cash in on the profit.
However, seeing as Stanbic is a solid bank and will be here for a long time to come, the smart thing may be to sell as much as is enough to recover what you paid for the shares and leave the rest in so you can benefit from the future prosperity of the bank.
But as I said, it is really your decision.
By Paul Busharizi
On Thursday Stanbic Bank will start trading on the Uganda Securities Exchange (USE).
Industry players are expecting a flurry of activity on the Stanbic counter for the next few weeks and the results of last week’s allocation tell you why.
The Stanbic share sale expected to fetch sh70b but more than sh200b was realised in bids from more than 35,000 applicants. Stanbic will refund sh140b to bidders who did not get their full allocation.
But since Ugandan individual bidders were more or less guaranteed their full allocation as the prospectus pointed out, institutional investors were left with negligible amounts compared to what they bid for.
Institutional investors both local and international laid sh113b on the table but only came away with sh7b or 6% of what they asked for.
One can expect institutions to be the first on Thursday to try and snap up more shares.
It is not unreasonable to think that huge gains will be seen on trading day one.
However, of more interest to me is that Ugandan individuals were able to fork out sh35b for Stanbic shares. Of course, one did not have to look at Stanbic to realise Ugandans can mobilise resources for good causes – the weddings that go on every weekend are proof enough.
But this raises two basic issues.
One, it is sad that unlike Kenya, the Government does not have a portfolio of many viable companies to offload on the exchange to capture this appetite for share offers.
In Kenya last year after the massive oversubscription of power generator, Kengen, the Government offloaded more shares from its Mumias Sugar Mills while the private companies Scangroup and Eveready jumped in with offers of their own.
This year, the Kenya government has already lined up reinsurance company, Kenya-Re and there are strong indications that Nairobi will offload some of its interest in the extremely successful cellular network operator, Safaricom, which it owns with UK telecom giant, Vodafone.
And secondly, as a result, we have lost a golden opportunity to capitalise on the momentum that has been created by the Stanbic offer to create new shareholders.
Currently, there are under 10,000 shareholders on the USE but with 15,000 subscribers to Stanbic, one can expect a few thousand more Ugandan shareholders.
Asset owners have a different outlook on life from non-asset holders.
Asset owners are unlikely to be anarchists and rabble rousers so the more shareholders the better for national stability.
So that aside, what happens when the share price shoots through the roof in the next few weeks?
Everybody is within his rights to sell his holding and cash in on the profit.
However, seeing as Stanbic is a solid bank and will be here for a long time to come, the smart thing may be to sell as much as is enough to recover what you paid for the shares and leave the rest in so you can benefit from the future prosperity of the bank.
But as I said, it is really your decision.