Cheers! Bralirwa to launch first IPO in Rwanda

Monday December 14 2009



Rwanda is all set for its first initial public offering early next year, despite a dull 2009 due to the global financial crisis.

The Rwanda Over the Counter Market said the IPO is expected by January 2010.

Officials told The EastAfrican that beer manufacturer Bralirwa is in the final stages of preparation for the flotation.

Bralirwa is the leading beer and soft drinks manufacturer and distributor in Rwanda.

The government currently has a 30 per cent interest in the brewery.

It will sell 25 per cent to the public while the remaining five per cent will be purchased directly by Heineken Group, which owns the majority 70 per cent shares.

The Ministry of Finance and Economic Planning is currently examining bids for candidates to act as transaction advisors and sponsoring brokers before announcing the total number of Bralirwa shares on offer, how much the IPO will raise and the expected price per share.

The Capital Markets Advisory Council (CMAC), which regulates the Kigali bourse, said the government has not yet filed a formal application.

”This is not a normal IPO, it is not an IPO by a private company,” officials said.

They added that despite being relatively young, the bourse could probably attract three more equity listings.

This is after the government expressed interest in off-loading its shares in three of the country’s biggest companies — the other two being MTN Rwanda and Sonarwa, an insurance company.

Celestine Rwabukumba, the operations manager of CMAC, said the bourse has since its inception two years ago received only the Kenya Commercial Bank (KCB) shares as a cross listing.

KCB listed two million shares on secondary markets on the four East African stock exchanges and traded a total of 68,100 shares in 42 transactions in Rwanda.

The other three stock exchanges in East Africa are in Nairobi, Kampala and Dar-es-Salaam.

Mr Rwabukumba said the price per share has since been fluctuating between Rwf160 (about $0.2), at the beginning, and Rwf170 ($0.25), the highest price per share.

The lowest price registered is Rwf153 ($0.18).By last week, the stock market was also offering Rwf 2 billion ($3.6 million) worth of government bonds at Rwf 99.8 ($0.01).

There were also Banque Commerciale Du Rwanda (BCR) bank bonds worth Rwf 150 million ($300,000) on offer at Rwf 100.50 ($0.012).

Officials are optimistic that Rwanda’s capital market will have a robust 2010, owing to an increase in financial institutions in the country.

In 2009, three new banks entered the country from West and East Africa.

KCB, which has already cross-listed, was the latest entrant.

Fina Bank of Kenya, Ecobank and Access Bank from West Africa are the other major banks operating in Rwanda.

Robert Mathu, the executive director of CMAC, said these are some of the institutions that would be keen on listing their shares.

A Zimbabwean Cabinet minister, Dr Henry Madzorera, recently visited Rwanda and told The EastAfrican that a company called Fast Transfer Securities of Harare, Zimbabwe, had already shown interest in engaging companies that wish to list on the Rwandan bourse.

Officials say the Rwanda government is embracing the use of the stockmarket to finance development of infrastructure.

In 2008, the Kigali City Council was the first in East Africa to float a $10 million “municipal bond” to fund its masterplan.

Infrastructure bonds are long term debt instruments issued by governments and local authorities to raise money for infrastructure development.

The funds are sourced from the private sector.

The Rwanda stockmarket is yet to go digital.

It could, therefore, miss out on opportunities enjoyed under the umbrella body, East African Securities Exchange Association.

The association, during a recent consultative meeting in Rwanda, approved a series of initiatives to grow the regional market and to mitigate the effects of the global financial crisis.

Simon Rutega, the chief executive officer of the Uganda Exchange in Kampala, said a service provider has been chosen to install a Smart Order Routing System which will connect the East African capital markets electronically.

The East African Securities Exchange Association has also mandated its technical committee to recommend a proposal that will address administrative bottlenecks to trade in the region, including IPO refunds.

The divestiture is being implemented under the overall guidance and co-ordination of the capital market privatisation committee, on behalf of the government.

Once the Bralirwa IPO is launched, the shares will be available to East Africans, who are classified by CMAC as domestic investors.

This year, Bralirwa celebrated 50 years of operations in Rwanda.

It has a wide range of brands, including Primus, Mützig, Amstel, Guinness and Heineken.

It is also the licence holder of products under the Coca Cola Company range in Rwanda.

The Rwanda capital market was established in 2007 under the Prime Minister’s decree.

The Capital Market Bill and the Capital Commission Bill have, subsequently, been presented to parliament.

The laws seek to establish an independent authority with powers to issue regulations, guidelines and rules for the capital markets.