Three IPOs expected on Rwanda bourse

Saturday January 02 2016

Trading on the Rwanda Stock Exchange (RSE) floor. PHOTO | FILE

Three initial public offerings are expected at the Rwanda Stock Exchange this year, broadening the investment options across East Africa.

Dealmakers involved in arranging the issues declined to disclose details of the flotations until they acquire regulatory approvals. The EastAfrican, however, has established that the three companies are among the most profitable in their sectors.

They are a bank where a principal investor is liquidating interests in order to venture into other businesses and a transport company that is seeking to fund acquisition of a modern fleet. A third company involved in logistics is looking for expansion capital. The latter two are classified as small and medium enterprises (SMEs).

The IPOs are said to be at an advanced stage, with the prospectuses going through Capital Markets Authority checks before roadshows in Burundi, Kenya, Rwanda, Tanzania and Uganda begin.

Rwanda Stock Exchange officials declined to comment on the new prospects, but said 2016 is expected to be a busier year for the bourse in terms of new issues.

“2016 should witness increased market capitalisation, liquidity and turnover largely driven by new listings. We believe the Rwanda Stock Exchange offers a bargain hunting ground for foreign investors helped by a very strong dollar,” said Davis Gathaara, managing director at Baraka Capital.


IPOs have been few and far between in Rwanda with beverages firm Bralirwa’s flotation in 2011 being followed by that of Bank of Kigali a year later and by that of Crystal Telecom, which owns a 20 per cent interest in MTN Rwandacell Ltd, in July 2015.

READ: Slow growth of accounts hits Kigali bourse

Many businesses in East Africa have been shying away from listings whose requirements they consider cumbersome compared with bank loans. The appetite for listings had also been eroded by stable and low interest rates that prevailed for a couple of years until mid-last year.

Even debt listings have been rare in Rwanda, with I&M Bank being the only company to have issued a bond in 2008.

The growing appetite for bank loans means many banks’ loan books have grown. Information from National Bank of Rwanda shows that lenders in Rwanda forked out loans worth Rwf472.5 billion ($631 million) in 2013 while in 2014, the loan book grew to Rwf653 billion ($872 million).

Prices at the bourse have hit rock bottom, pulling down the benchmark Rwanda Share Index (RSI) by 21 per cent. However, the drop in the All Share Rwanda Index has been marginal. Analysts project the index will remain flat this year.

Rock bottom prices

Indicative of the market is Crystal Telecom, which dropped from Rwf144 ($0.192) per share to Rwf100 ($0.133) on Christmas Eve, below the IPO price of Rwf105 ($0.140). Bralirwa stocks slid from Rwf430 ($0.576) to Rwf174 ($0.233) before discounting for a share split in the course of the year.

The CMA attributes the performance to global factors, saying the Rwanda market was resilient under the circumstances.

“Weak global commodity prices weakened the economic outlook for most of sub-Saharan Africa. Coupled with the currency bleeding that was experienced by most of these African countries, this led investors to adopt a wait-and-see approach on African stockmarket prices,” said CMA chief executive officer. Robert Mathu.

Celestin Rwabukumba, CEO of the RSE said the turnover and volume at the bourse remained impressive despite the price drops.

“As of November 15, the overall value grew by 4 per cent,” said Mr Rwabukumba. 

Statistics from RSE indicate that from January-November 15, the market recorded Rwf34 billion ($45.5 million) worth of trade.