I&M Bank Rwanda’s stock has continued to trade above the offer price, gaining 21 per cent value from Rwf90 ($0.11) to reach Rwf109 ($0.13) on its 20th day of trading on the Rwanda stock Exchange (RSE).

The share price’s steady upward movement after a slow start in the first two weeks of April follows demand by buyers seeking a slice of the lender on the secondary market.

The I&M Bank Rwanda stocks started trading on March 31 after its IPO registered a 209 per cent subscription. The Rwandan government offloaded more than 99 million shares, representing a 19.81 stake, of I&M Bank Rwanda.

• READ: I&M Bank share offer opens on Rwanda bourse

“Investors have started to buy aggressively while others are selling off to book profits,” said Celestin Rwabukumba, RSE chief executive officer.

However, there is a supply shortage of the shares as bids outweigh supply. This is an indication that investors in the primary market have adopted a wait-and-see stance.

Rwabukumba said holding on to shares is a reflection that the market has attracted long-term investors rather than “traders” looking for quick gains.
The turnover on the I&M Bank Rwanda counter had reached over 831,000 shares worth Rwf85 million ($102,875) by April 20.

While Mr Rwabukumba said the share price is trading within an expected range given that liquidity is still low, other deal makers believe the bank is not trading at its true value. They claim it is held back by the bank’s failure to pay dividends to new shareholders.

The Rwanda government pocketed all Rwf459.98 million ($557,000) in dividend pay in 2016 ahead of the share offer. This means the new investors must wait until this year ends before they get a dividend.

Last year, the market declined by 55.6 per cent to $20.7 million (Rwf17.1 billion) compared with the 2015 trading, marking its worst performance of the market when listed companies’ share price dipped to their lowest level in recent memory.

Projected profitability of the bank and future investment plans, according to investment advisors, are bound to attract interest in the shares, thereby boosting the liquidity of the market.

Aggressive growth plan
The bank has announced big card investments to support its aggressive growth plan over the next five years as it seeks to regain its market share lost to growing competition.

It is estimated that the bank plans to spend $29 million on IT upgrading, and new state-of-the-art headquarters. Indeed, the bank has started construction of a $25 million new signature head office building.

A fully fledged brick-and-mortar branch in Muhanga is to be set up, alongside an upgrade of the existing branches of Musanze, Gicumbi, Rubavu and Rusizi and ATMs.