Capital Markets

UAP targets wealthy investors in share sale

UAP Holdings has set the minimum subscription value for its shares at Sh120,000, setting the entry bar high for small investors in a reflection of the company’s preference to attract sophisticated shareholders.

Also read: Wanjui meets 25pc threshold after UAP’s public share offer

The financial services group, which is seeking Sh750 million through sale of 12.5 million shares, has put the minimum subscription limit for its public share offer at 2,000 shares for each applicant.

With the price set at Sh60 per share, the minimum amount that an investor will be required to have to participate in the offer is Sh120,000, effectively locking out small investors.

“The minimum application size for retail, institutional, and foreign investor categories of applicants for the offer shares is 2,000 and then in multiples of 100 shares thereafter,” says UAP in the information memorandum for the share sale released on Wednesday.

The minimum application threshold for employees of the group is set at 500 shares equivalent to a cost of Sh30,000.

In an earlier interview with the Business Daily, Stanbic Bank director and head of capital markets and advisory for East Africa, Naval Sood, said UAP Holdings was looking for “about 1,000 fairly sophisticated investors,” a pointer to why the company has set a high entry threshold.
Stock market regulations require a company to have at least 1,000 shareholders before listing on the main board of the Nairobi Securities Exchange.

UAP has announced plans to list at the bourse within the next 18 months, and its preference for sophisticated investors may be a reflection of the key shareholders’ wariness of price volatility that comes with having too many retail shareholders.

UAP Holdings has 10 operating subsidiaries covering insurance, property and financial service sectors in Kenya, Uganda, South Sudan, and Rwanda.

The company has divided investor pools into local, foreign, institutional, and employees.

According to the information memorandum, UAP Holdings says that one of the objectives for the public offer is to ensure that at least 25 per cent of its shares are held by not less than 1,000 shareholders.

The share sale will close on December 5 and shares will start trading on the over-the-counter market on January 9, with Genghis Capital and CfC Financial Services providing the trading platform.

The move to list its shares at the exchange will offer majority shareholders an exit path to unlock their investments in the company and also fall into compliance with regulatory shareholding limits.

Currently, the company has 25 shareholders, the top three being Bawan Ltd that holds 43 million shares or a 35.84 per cent stake.

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