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Why Vodacom Tanzania is extending IPO deadline

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Brokers at the Dar es Salaam Stock Exchange. Vodacom Tanzania Plc has extended the deadline for its initial public offering by three weeks and will now allot shares from May 19, 2017. PHOTO | FILE 

By SAMUEL KAMNDAYA, The Citizen

Posted  Thursday, April 20   2017 at  15:02

In Summary

  • The IPO, which officially started on March 9, 2017, was due to close April 19 ahead of the company’s listing on the Dar es Salaam Stock Exchange on May 16.

  • The allotment of shares is now proposed to take place from May 19, while listing at the DSE is scheduled for June 6.

Vodacom Tanzania Plc has extended the deadline for its initial public offering (IPO) by three weeks in order to give local investors more time to take part in the share sale.

Vodacom seeks to raise Tsh476 billion ($213 million) through the sale of its 560 million shares at a price of Tsh850 each ($0.3) in the IPO.

The telecommunication firm is offloading a 25 per cent stake to the public in compliance with the Electronic and Postal and Communications Act, 2010 as amended by the Finance Act 2016.

The IPO, which was officially issued on March 9, 2017, was due to close yesterday (April 19) ahead of the company’s listing on the Dar es Salaam Stock Exchange on May 16. With the extension, the allotment of shares is now proposed to take place from May 19, while the listing is scheduled for June 6.

“Following consultation with the government and the respective investment communities including Members of Parliament, groups of civil servants and officials of the constituent member organizations of the Tanzania Federation of Cooperatives, we have requested and received approval from the CMSA [Capital Markets and Securities Authority] to extend the offer period by three weeks to Thursday, 11th May 2017,” Vodacom Tanzania director of corporate affairs and public relations Rosalynn Mworia said Wednesday.

Signs of a possible extension of the IPO deadline started to show on Wednesday last week when Vodacom Tanzania Plc, CMSA, DSE and other brokers conducted an awareness seminar to Members of Parliament in Dodoma at which the lawmakers expressed their interest in the share, but requested for more time.

Some MPs asked the Speaker of the National Assembly, Job Ndugai, to look into how they could be facilitated with loans to take part in the IPO.

CMSA director of research, policy and planning Nicodemus Mkama said that they would consider extending the IPO.

Orbit Securities general manager Juventus Simon told The Citizen yesterday that with three holidays within the IPO period, it only made sense for them to extend the period.

“The MPs expressed their willingness to take part in the IPO…we have also consulted a number of retail investors who are willing to take part. Unfortunately, there were holidays as the deadline approached, necessitating the extension,” said Mr Simon, whose company was the IPO’s lead transaction advisor.

Tanzanians marked Karume Day on April 7, then attention shifted to the Easter holidays; consequently activity on the DSE declined.

According to Zan Securities Ltd CEO Raphael Masumbuko, the IPO has attracted a lot of enthusiasm among retail and institutional investors.

“With the number of investors increasing, it was only fair that the deadline be extended. We are hopeful that many more will come,” he told The Citizen yesterday. "We are hopeful that it will be oversubscribed as we anticipate an increased number of both retail and institutional investors in the coming three weeks.”

Foreign investors cannot take part in the IPO but can invest after the listing.

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