Rwanda’s IPO pipeline runs dry amid uncertainties

Rwanda’s initial public offering (IPO) pipeline is projected to be dry this year as companies that were planning to list have shelved their plans.

The Capital Markets Authority Council (CMAC), Rwanda’s industry regulator, said there is likely to be no IPO at the Rwanda Stock Exchange in 2012.

Kenyan investors have in the past two years shown heavy interest in the Rwanda exchange.

“We have had to go back to the drawing board which could mean that we could have zero of the three companies we were expecting,” CMAC chief executive, Robert Mathu told the Business Daily last Friday.

Mr Mathu had earlier said that three firms from a pool of five were potential candidates for listing through an IPO within the next five years beginning 2011.

He did not name the firms but said that they were drawn from the banking, insurance, telecommunications and cement industries.

This implies that at best, East African investors should have expected an opportunity to buy shares in MTN (telecoms), Sonarwa (insurer), BRD and Housing Banks.

The government of Rwanda has earmarked 20 firms for listing as part of its privatization plan but only Bank of Kigali and Bralirwa have listed.

Interest

Local brokers said that there has been a heavy interest in the RSE and should companies backtrack on their IPO intention, it will be a disappointment to Kenyan investors.

“Quite a number of Kenyan have turned their attention to Rwanda because that market was doing better than here,” Standard Investment Bank executive chairman, James Wangunyu, said.

The Bank of Kigali IPO was oversubscribed by 274 per cent, while the Bralirwa IPO was over-subscribed by 174 per cent.

Mr Wangunyu said that while Rwanda’s predicament may boost the Kenyan market.

“Those funds will be utilised here rather than being expatriated,” said Mr Wangunyu.

Kestrel Capital executive director Andre DeSimone said that it is not surprising that Rwandese firms or firms anywhere else are scaling down as the global economy is steeped in uncertainties.