The Dar es Salaam Stock Exchange has opened up its ownership to the public, allowing individual and institutional investors, including stockbrokers, to acquire up to a 20 per cent shareholding in the 20-year-old bourse.

The share offer and its eventual self-listing on the exchange marks the culmination of the demutualisation process — which included the change in the legal status of the bourse from a private company limited by guarantee to a public company limited by shares.

The DSE restructured and converted to a public company limited by shares in June last year.

During the demutualisation process, 20 institutions that acted as guarantors with an undertaking to contribute money in the event the bourse was wound up, agreed to be allotted one share each to enable re-registration and change of name of the exchange from Dar es Salaam Stock Exchange Ltd to the Dar es Salaam Stock Exchange Public Ltd Company (Plc).

These institutions included eight of the current 11 stockbrokerage firms trading on the DSE.

DSE chief executive Moremi Marwa told The EastAfrican that no special privilege would be given to the trading participants and that their level of shareholding in the demutualised exchange would depend on their level of interest in the IPO, the level of subscription and the allotment results.

“There is no special privilege that has been afforded to stockbrokers — their quantum of shares and percentage of shareholding will depend on their level of interest through share purchase application in the IPO process relative to the overall subscription — as it is for any investor interested in a stake in the DSE, their ownership will depend on the level of subscription and the allotment results,” said Mr Marwa.

In 2014, the Nairobi Securities Exchange completed its demutualisation process, which included change of name, change of its legal status, an IPO and eventual self-listing.

But, unlike the DSE,  21 stockbrokers on the NSE allotted themselves 100 shares each representing 4.76 per cent shareholding in the bourse, resulting in their combined shareholding of 99.96 per cent.

After the re-registration of NSE as a company limited by shares the stockbrokers agreed to offload to the National Treasury and Capital Markets Authority’s Investor Compensation Fund a shareholding of five per cent each.

The stockbrokers then sold 66 million shares to the public in 2014, reducing their combined stake to around 56 per cent.

These trading participants were given a three-year window to reduce their shareholding in the bourse to below 40 per cent.

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Mr Marwa, however, said DSE is not owned by any of its licensed trading members and until the start of the demutualisation process, the bourse was a mutual entity limited by guarantee with no shareholders and share capital.

“Our long-term objective is to have a more vibrant stockmarket with diverse financial and risk management products and services,” he said, adding, “We will therefore continue to pursue this objective by ensuring that we have a conducive legal and regulatory framework, a capable and accessible infrastructure to accommodate diverse products as the public is encouraged and motivated to use the stock market for capital raising, investment and risk management purposes.”

A demutualised DSE is expected to play a significant role in attracting local and foreign capital to finance public and private enterprises.

The DSE is offering 15 million new shares to the public, accounting for 30 per cent of the company’s authorised shares capital of 50 million ordinary shares.

The funds will be used to upgrade the bourse’s core operating system, introduce new products and services and finance the company’s day-to-day operations.
The offer opened on May 16, and closes on June 3.

The new shares will be self-listed and start trading on the DSE on July 12.

DSE has 23 listed companies as at March 30, and its demutualisation will make it the third Exchange in Africa after Johannesburg Stock Exchange (JSE) and the NSE to separate its ownership from the trading rights.