London-based private equity fund Actis intends to sell shares of Uganda’s power company, Umeme, through a double initial public offering (IPO) in Kampala and Nairobi.

This could mark the region’s first cross-border IPO listing, though the transaction is still in the early planning stages and the fund is yet to file applications with capital markets regulators.

Paul Fletcher, a senior partner at Actis — which owns the electricity distributor — said that the firm was targeting a cross-border IPO to secure liquidity of the stock in the secondary market.

Listing on the Uganda and Kenya securities markets is also expected to boost the chances of a full subscription of the offer for the private equity firm, which has also invested in DFCU Bank in Uganda and BCR Bank in Rwanda.

“We would like a dual listing as it would not only help liquidity post-IPO, but it would be an important step towards regionalising the market,” said Mr Fletcher, who added that the timing of the planned offer is still under review.

In its last meeting held in 2011, the East African Securities Exchanges Association said that listing of Umeme and Tullow Oil on the Uganda Securities Exchange was expected this year.
Two weeks ago, Joseph Kitamirike, chief executive officer of the USE, said that the Uganda bourse was still awaiting applications from the two companies and therefore could not comment on the issue.

“We have not received any documents from the companies,” he said, adding that although the bourse is expecting new listings, the time-lines will only be established once applications are received.

Umeme, which was established in 2005, won a 20-year concession from the Uganda government for power distribution. In November 2009, Actis took over the power company in a deal that was valued at $15 million.

At the end of 2010, Umeme had secured a loan with the International Finance Corporation for a refurbishment programme that saw over 90,000 electricity distribution poles replaced at a cost of approximately $100 million.
Mr Fletcher said that the outlook for private equity in East Africa is buoyant, driven by demographics, urbanisation and the natural entrepreneurial energy in the region and that these strengths are being enhanced by regionalisation. 

The Uganda power utility firm could become one of at least three other firms that have announced an intention to list at the Nairobi Securities Exchange.

The others are CIC Insurance, clothing and lifestyle goods retailer Deacons and Longhorn Publishers.

CIC Insurance has already submitted its application for listing at the NSE to the Capital Markets Authority.

The companies that have already announced intentions to go public are however opting for listing by introduction, fearing IPO under-subscriptions due to the high interest rate and inflation environment in the country.
TransCentury and CFC Insurance Holdings listed at the NSE by introduction last year. Only three firms in the region listed through IPOs last year — Kenya’s British American Investments Company, Rwanda’s beer maker Bralirwa and Bank of Kigali.

Precision Air in Tanzania also raised funds for expansion at the Dar es Salaam Securities Exchange, while East African Breweries sold its 20 per cent stake in Tanzania Breweries at the Dar es Salaam bourse.

This story first appeared in The Business Daily.

The NSE chief executive, Peter Mwangi, said in an interview last month that at least eight firms have signalled their intention to list at the bourse this year.

He said five of the companies are planning to list on the main market segment; two others will list on the Growth and Enterprise Market Segment - which is expected to be operational by the middle of the year - while one firm from a neighbouring country is expected to list its shares in Nairobi.

Mr Mugwe writes for Business Daily.