Money Markets

Uganda’s National Insurance Corp to launch IPO

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Traders at the Uganda Securities Exchange. The National  Insurance Corporation IPO will be launched this month.  REUTERS

Traders at the Uganda Securities Exchange. The National Insurance Corporation IPO will be launched this month. REUTERS 

By GEOFFREY IRUNGU

Posted  Thursday, December 31  2009 at  18:42
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Uganda’s National Insurance Corporation (NIC) initial public offering (IPO) will be launched into the market this month and list at the Uganda Securities Exchange this year after a series of postponements.

Mr Hassan Mohammed, the outgoing joint managing director of Dyer and Blair Investment Bank which was a key player in the preparations for the IPO, told Business Daily that the offer will be launched on January 14 and close on February 5.

The share allotment will be done on March 9 and the listing on March 25.

NIC, the biggest underwriter in Uganda, is selling a 40 per cent stake which amounts to 161.6 million shares. The shares are priced at Ush45 per share an equivalent of Sh1.80 in Kenya or two US cents. The price is lower than that of Sh2 per share for Stanbic Uganda offered in an IPO in 2006.

The Uganda government sold a 60 per cent stake of the 45-year- old firm to Industrial and General Insurance Company Limited of Nigeria in 2005.

Mr Japheth Kato, executive director of Uganda’s Capital Markets Authority, is said to have been satisfied with the preparations so far including the prospectus for the IPO.

The USE is a small entity with only 11 listed firms compared to Kenya which has 55 and Tanzania with 15, nearly half of which have been listed in the last few years.

Some Kenyan companies including Kenya Airways, East Africa Breweries and Kenya Commercial Bank and Jubilee Holdings are cross listed in all the three exchanges of the original members of the East African Community. Equity Bank is listed on the USE and Nairobi Stock Exchange.

Some IPOs of the past few years including Stanbic Uganda attracted not only Ugandans but had a large participation from Kenyans citizens.
Uganda Clays and New Vision Printing and Publishing Company were listed on the USE in 2008.

Both the USE and DSE have less liquid counters compared to Kenya’s NSE due to low market activity, but the recent IPOs have improved their liquidity.

USE suffered a body blow at the onset of the global financial crisis as capital outflow took place causing a fall in stock prices. The same development was witnessed at the NSE and the DSE as their respective economies took a beating.

The listing of NIC has been in the works for last three years but was delayed by disputes with the staff association of government-owned Makerere University due to issues relating to a pensions fund that the underwriter has been managing on its behalf.

A failure by the NIC to include in its information memorandum all the funds purportedly owed to Makerere staff caused the university to resist the listing.

But Press reports indicate that the dispute has not yet been resolved. The chairman of Makerere University staff association, Mr Tanga Odoi, wants the dispute to be settled to their satisfaction.

The association is still seeking to stop the sale and listing of the NIC shares. Their main source of dissatisfaction is that NIC has not acknowledged the full amount the association believes it is owed.

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