Investors dash for Bralirwa shares as IPO deadline closes in

Appetite for Bralirwa shares within the local potential investors has increased ahead of tomorrow’s deadline for Rwanda’s first Initial Public Offer (IPO), a mini-survey by Business Times has revealed. Retail and institutional investors are flocking to banks and brokerage firms to acquire equity stakes in the country’s biggest brewery and soft drinks maker. This follows the official launch of the sale of government’s 25 percent stake in the brewery on November 23 to the public. According to Lionel Mudandi, the Operations Officer at the Centenary House based African Alliance Rwanda Ltd one of licensed stockbrokers; interest in the IPO has increased dramatically within the last week. “We are now very busy compared to the first week because many people are showing interest as the deadline is close,” he said yesterday. However, Mudandi observed that generally the public is comfortable working with the banks as opposed to the brokerage firms. “People trust banks and very few are coming to us (brokerage firms) because they do not have enough knowledge about brokerage firms and their services,” Mudandi said the brokerage firm is working with banks to send them clients when shares beginning trading on the secondary market. He however expressed concern over the timing of the IPO, saying that being a festive season; the majority of the people are preoccupied with celebration and holiday events. An agent at Dyer &Blair Securities Rwanda limited, who spoke on condition of anonymity because they are not authorised to speak for the brokerage firm also noted that the IPO has gained momentum in the last week of the offer. “People are rushing to the banks; most people are interested in finding out the benefits of investing in Bralirwa while others have to been taken through the fundamentals including defining a share.” Each of the 128, 570, 000 shares of the IPO offer costs Rwf136. The minimum per application form which costs Rwf13, 600 is 100 shares. Andrew Otengo Owiny, the Executive Director of MBEA Brokerage Services, observed that a significant number of potential investors have purchased shares this week. “The traffic (of potential investors) has been higher – we are beginning to see people actually buying shares close to Rwf10 million,” he said. Owiny who also doubles as the lead transaction adviser of the IPO, allayed fears by stock brokers that while potential investors may work with banks now, it will be mandatory for them to work with brokerage firms once the shares begin trading. “This is purely about lack of familiarity with brokerage services; a lot of people have bank accounts – you cannot trade in shares unless you have brokers,” he said. Owiny said banks will have to direct clients to brokerage firms once the shares begin trading. While the deadline for buying shares still stands, Owiny said possibilities of extending the deadline will be determined by demand. “If everything has been bought it (deadline) won’t be extended; we do not want to discourage investors who took their time to buy shares. The extension of the deadline would be purely to allow more Rwandans to participate should we see that there is an appetite.” According to the Prospectus announcement of the offer and risk allotment results will be made public on January 18, next year while shares will start trading on the Rwandan Over-The-Counter (OTC) bourse on January 31, 2011. Ends

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Investors dash for Bralirwa shares as IPO deadline closes in