All investors from the East African Community (EAC) who will seek to buy shares in Bralirwa during its Initial Public Offering (IPO), to be launched in a month’s time, will be treated like local investors.

This means that investors from Kenya, Uganda, Tanzania and Burundi will buy the shares at the same price as Rwandans when the country launches its first IPO.

"We have a very clear allotment policy and by the (EAC) Common Market Protocol that was signed this year, we shall have to consider the EAC investors as local investors,” Vincent Munyeshyaka, the Chairman of the Rwanda Capital Markets Privatisation Committee said in an exclusive interview.

The committee is responsible for the privatisation of government parastatals through the stock exchange.

Subject to the Capital Markets Advisory Council (CMAC) approval, the listing will represent 25 percent of the government’s equity stake in Rwanda’s largest brewery and soft drinks maker.

Government also seeks to sale 5 percent to the Heineken group at a price that will be determined during the book building process. Heineken’s current equity holding in Bralirwa stands at 70 percent.  

Officials said the IPO, which will last for a month before listing the shares on the Rwanda Over-The Counter (OTC) bourse, has been classified in two categories including the domestic pool, where domestic investors (Rwandans and EAC) have been allocated 70 percent of the total stock to be issued while foreign investors will receive 30 percent.

While Munyeshyaka said that government has already approved the valuation report, which captures the value of the stock, he declined to disclose details like the share price and total shares that will be floated.

He said they were in the process of approving the prospectus, a document that gives the clear value of the company with regard to corporate governance.

In an attempt to eliminate any kind of under subscription, the government has arranged underwriters or private firms to purchase any remaining shares not purchased in the IPO.

"The committee for facilitating the transaction has got the appetite for this product but some segments for potential investors who would like to participate have that kind of fear that they will not be able to fully subscribe to,” Munyeshyaka said.

Robert Mathu, the Executive Director of the Capital Markets Advisory Council (CMAC) told Business Times in interview that the main challenge so far is the limited level of public awareness within the Rwandan masses.

To address this, he said, CMAC is conducting a pre-offer public campaign. 
Bralirwa will be among the several other government listings expected over the next few years as government seeks to boost the growth of the nascent stock exchange and also accelerate its privatisation programme. 

Mathu said: "The government is giving investors an opportunity to participate in the most successful company in the economy. That way it will really encourage investors to view the capital markets as way of channelling their savings.”

According to him, Bralirwa is a blue-chip stock not only in Rwanda but also in the region.

"Last year they paid 100 percent of their profits to shareholders. So, if they sustain this policy of paying that means that it’s good income stock.”

The IPO also comes at a time Rwanda has not yet developed a fully fledged stock exchange and the capital markets legal framework is perceived as insufficient to offer the much needed investor protection.

However, Mathu says that two important laws—the one establishing the Capital Markets Authority (CMA) and the law regulating the capital markets— are already in parliament and expected to be published before the launch of the IPO.

"The prospectus has already been issued by the registrar of companies so that we can provide legal guidelines on the level of disclosure. The disclosure of the information in the prospectus is first and most important protection for the investors,

"We also have a good system of vetting the intermediaries. In regard to the infrastructure, we are a young market but we believe that what we have is sufficient to handle the transaction and provide high level of protection to investors.”

The officials said that the Bralirwa IPO is timely as the macroeconomic environment is favourable with better liquidity conditions and barely any budget deficit.   

"For the capital market and this transaction, we consider two important elements, the liquidity and government’s monetary programme which is managed by the Central Bank. If you consider our consolidated situation of our financial sector, the liquidity ratio is good and our country is not experiencing any budget deficit,” Munyeshyaka said.

The Bralirwa IPO comes when the Rwanda OTC market is also attracting interest from several regional companies, especially Kenya firms that have expressed the desire to cross list on the 33 months old bourse.

Last week, Kenya’s Nation Media Group cross listed 157,118,572 shares on the OTC market following Kenya Commercial Bank’s cross listing last year.

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