Umeme IPO investors to get refunds after over-subscription

Investors who applied for Umeme shares will get refunds of part of their cash following a massive oversubscription of the offer.

The company’s head of communications, Henry Rugamba, on Thursday told Business Daily that its shares were oversubscribed by 30 per cent.

“Shares for retail customers, foreign markets and institutions have been oversubscribed. The launch will be November 30 on the Uganda Securities Exchange,” said Umeme in a statement.

The Ugandan power distributor was selling a total of 622.37 million shares from which it was expecting to net Sh5.7 billion (Ugsh171.15 billion). The share sale opened on September 20.

Anne Aliker, the head of investment banking for East Africa at Standard Bank (the parent company of Stanbic Bank Uganda which is transaction advisor for the offer), however, said that she could not divulge any details until the market regulator approves the results.

“On an overall basis, it looks like we were oversubscribed but I cannot give details,” said Ms Aliker.

The share sale, which closed on Tuesday was offering 56 million shares or nine per cent of the shares on offer to employees and directors of the company and 124.47 million shares (20 per cent) to retail East African investors.

It was also offering 155.59 million shares (25 per cent) to qualified institutional investors in East Africa and 286.3 million shares (46 per cent) to international investors.

However, its prospectus notes that in the event of an oversubscription, applicants will be allotted 100 shares in the first instance then in multiples of another 100 shares until the pools are fully exhausted.

This means that investors will be getting refunds on excess shares. Umeme had also sweetened the deal by offering bonus shares in the ration of one share for every 10 allotted specifically to employees and customers who are not foreign investors or qualified institutional investors.

Proceeds from the sale of 272.37 million shares worth Sh2.49 billion (Ugsh74.9 billion) will go towards the payment of a shareholder loan, while proceeds from the sale of the balance of 350 million shares worth Sh3.2 billion (Ugsh96.25 billion) will accrue to London-based private equity fund Actis.

On Tuesday, Charles Chapman, managing director of Umeme, said in a statement that the International Finance Corporation had confirmed that it would participate in the initial public offer.