Cipla Quality Chemicals Ltd’s public equity offer was launched at the Uganda Securities Exchange (USE) last week, but investor responses were muted shortly after the transaction launch while analysts offered a cautious endorsement, The EastAfrican has learnt.
The company’s final prospectus was approved by the country’s capital markets regulator last week on Monday in a move that ended a six-year Initial Public Offer drought at the local bourse.
Before this deal, Umeme Ltd had been admitted to the market on November 30, 2012 in an IPO valued at $69 million, with 622,378,000 shares available for sale with each share priced at Ush275 ($0.073) for retail investors.
The IPO was oversubscribed by 36.9 per cent, according to industry records.
The CiplaQuality Chemicals IPO carries an offer price of Ush256.5 ($0.068) per share alongside 657,179,319 shares available for sale.
The pool of shares provided to investors is equivalent to 18 per cent of the total issued shares of the company, according to its prospectus.
“The benefits of coming to the market are immense — from capital raising though corporate debt issuance and secondary public offers, to offering an exit avenue to founder shareholders, and the immeasurable public relations value that comes with being a quoted company,” said Keith Kalyegira, chief executive officer at Uganda’s Capital Markets Authority.
Initial market responses to this IPO appear muted, with both retail and institutional investors showing signs of lukewarm behaviour towards the transaction.
A look at analysts’ reports issued shortly after the IPO launch shows a cautious outlook on the drug maker’s future performance coupled with clear endorsements issued for the transaction.