Dar investors can buy ABG in shillings

Tanzania investors could purchase shares of the African Barrick Gold (ABG) at the London Stock Exchange in shillings deposited at Citibank at the day’s exchange rate but US dollar depositors will add a 10 per cent fluctuation margin.

The deadline for payment is March 18 while the allotment will be on March 19 followed by listing on March 24.

Orbit Securities Ltd chief executive Laurian Malauri told The EastAfrican that the global offer was also necessary to trade under private placement which is not subject to Capital Markets Regulatory approval in Tanzania.

Mr Malauri said such approvals have been obtained at principal listings in London.

ABG has said that should the “overallotment option” of 25 per cent be exercised in full during the initial public offering, the company will release additional 1.8 per cent of its shares to the London bourse for sale.

In such a case, the firm will remain with 73.2 per cent instead of its 75 per cent stake after the IPO’s trading at book building between March 5 and March 18, before trading on un-conditional basis starting March 24 at the London Stock Exchange.

The offer is on book building with price range set at 55 pence to 65 pence. Book building refers to the process of generating, capturing and recording investor demand for shares during an IPO in order to support efficient price discovery.

The “book” is the off-market collation of investor demand by the book runner and is confidential to the book-runner, issuer and underwriter.

Where shares are acquired, or transferred via a book-build, the transfer occurs off-market and the transfer is not guaranteed by an exchange’s clearing house.

The directors intend to adopt a progressive dividend policy that will take into account the performance of ABG Group as well as its capital requirements and cash flows, while maintaining an appropriate level of dividend cover.

The company may only pay dividends if sufficient distribution profit is available.

Subject to certain exceptions, the company and the major shareholders—in relation to itself and its subsidiaries—have agreed not to sell off ordinary shares for a period of 180 days after admission and the directors have agreed not to sell the same share for a period of 360 days after admission.

According to the prospectus, ABG intends to use the net proceeds of the global offer — about $1.0 billion — to repay loans outstanding to the Barrick Group of about $575 million.

If the company exercises the over allotment option, the proceedings derived from the option, and initial cash balance from global offer $280 million will fund its growth strategy through exploration and potential acquisitions.

Ordinary share allotment