Umeme set for dual listing after cross-border IPO

London-based private equity fund Actis intends to sell shares of Uganda’s power company, Umeme, through a double initial public offering (IPO) in Nairobi and Kampala.

This could mark the region’s first cross-border IPO listing, though the transaction is still in the early planning stages and the fund is yet to file applications with the capital market regulators.

Paul Fletcher, a senior partner at Actis — which owns the electricity distributor — told the Business Daily that the firm was targeting a cross-border IPO to secure liquidity of the stock in the secondary market.

Listing on the Nairobi and Uganda securities markets is also expected to boost chances of a full subscription of the offer.

“We would like a dual listing as it would not only help liquidity post-IPO, but it would be an important step towards regionalising the market,” said Mr Fletcher, who added that the timing of the planned offer is still under review.

In their last meeting held in 2011, the East African Securities Exchanges Association said that listing of Umeme and Tullow Oil on the Uganda Securities Exchange (USE) was expected this year.

Joseph Kitamirike, the chief executive officer of the USE, told the Business Daily two weeks ago that the Uganda bourse was still awaiting applications from the two companies and therefore could not comment on the issue.

“We have not received any documents from the companies,” he said, adding that although the bourse is expecting new listings, the timelines will only be established once applications are received.

Umeme , which was established in 2005 won a 20-year concession from the Uganda government for power distribution.

In November 2009, Actis took over the power company in a deal that was valued at approximately Sh1.33 billion ($15 million).

At the end of 2010, Umeme had secured a loan with the International Finance Corporation for a refurbishment programme which saw over 90,000 electricity distribution poles replaced at a cost of approximately Sh8.9 billion ($100 million).

The Uganda power utility firm could become one of at least three other firms that have announced an intention to list at the Nairobi Securities Exchange (NSE).

The others include CIC Insurance, clothing and lifestyle goods retailer, Deacons and Longhorn Publishers.

CIC Insurance has already submitted its application for listing at the NSE to the Capital Markets Authority.

The companies that have already announced intentions to go public are however, opting for listing by introduction, fearing IPO under-subscriptions due to the high interest rate and inflation environment in the country.