Ecobank extends $2.5b IPO till Oct 31

Ecobank International Inc, the parent company of Ecobank Group, which has operations in Rwanda and Kenya, has extended it’s $2.5 billion initial public offer.

The move is meant to allow more regional investors to participate buy its shares.

The bank, which has operations in 24 countries, launched what was described as Africa’s biggest cross-border offer in August this year to fund the group’s rapid expansion across Africa.

However, the bank’s officials in Rwanda said the sale that opened on September 25 on three African stock exchanges has now been extended by a month and will end on October 31 in Ghana and Ivory Coast and October 17 in Nigeria.

The bank is currently listed on the Ghana Stock Exchange (GSE), the Nigerian Stock Exchange (NSE) and the West African Francophone Countries-African Bourse in Abidjan, which serves the eight countries in West Africa’s CFA franc zone.

According to Clement Dodoo, Ecobank’s regional risk manager for East and Southern Africa, the bank has extended its offer of 3.76 billion shares to existing shareholders at $0.27 per share. The public offer is 5.12 billion ordinary shares at $0.29 each, payable in full on application.

Mr Dodoo said that Rwandans who were offered the opportunity to buy the bank’s shares through Ecobank Rwanda and other prospective investors in the East African region still had the same equal chance to access these shares within the stipulated time.

He added that interested East African investors have been called upon and advised to access shares through debit or credit cards, with which they can apply online.

“In Rwanda, if you want to access the shares, we take you through all the processes. But Ecobank Rwanda will buy the shares on your behalf,” he said.

“We are co-ordinating the IPO in the rest of the East African region. These shares are for our parent company — Ecobank Transnational Incorporated,” he added.

While there is still no law that regulates Rwanda’s over-the-counter market, Ecobank said a letter received from Kigali’s Capital Markets Advisory Council neither disapproved nor approved the participation of Rwandan investors in the Ecobank IPO.

In such IPOs, investors usually need to have had some basic approvals from their respective countries’ securities and exchange commissions.

Ecobank has also announced its intention to open a branch in Bujumbura by 2009.

The bank made its entry into Burundi by raising capital through Ecobank Group, acquiring 75 per cent stake in the Societe Burundaise de Banque et de Financement and acquiring a 25 per cent stake from the Burundian government.

The Togo-based banking group early this year completed its entry into the Kenyan market after acquiring a 75 per cent stake in mortgage financier East African Building Society (EABS).

At that time, EABS was valued at Ksh1.57 billion ($22.4 million), so an acquisition of a 75 per cent stake meant the deal could be worth more than Ksh1.1 billion ($15.7 million).

The bank’s regional director for East Africa, Albert Essien, said a foothold in Uganda will come in the fourth quarter of this year.

Ecobank’s move to consolidate its presence in the East African market is expected to intensify competition in the financial services market, where recent acquisition deals have added muscle to previously small players.

On the extension of the IPO, Ecobank Rwanda’s country managing director Daniel Sackey said, “Even though receipts from the country were below expectation, it has been a success in Rwanda in terms of creating awareness.”

The Rwandan subsidiary is still collecting investors’ application forms from its branches all over the country.

While investors are still not sure of the full impact of the global financial crisis, management in Kigali believes that this will adversely affect receipts from the Ecobank share offering.

Mr Sackey was quoted in the local press as saying, “The world is now a global village and information is rapidly transmitted to all markets. Sentiments are very high and people have different reactions to information.”

The East African region is also set to benefit from a recent deal worth $213 million between Ecobank Group and the International Finance Co-operation that will see the latter finance its expansion plans and increase financing to small and medium enterprises.

Of the total amount, $100 million will be made available via a convertible loan to support the bank’s regional expansion.

With over 500 branch operations spread around Africa, the convertible loan will also help fund opening of more branches in East Africa.

“Our vision is to become the largest bank in Africa and our entry into the region is part of that strategy,” said Michael Monari, Ecobank’s Kenya country representative.

“We have been looking for a partner who can give us a strong footprint in Kenya — East Africa’s financial hub — and we think that EABS Bank fits the bill,” he said.

Ecobank Transnational, the parent company of the largest independent regional banking group in Africa, was incorporated in 1985.