A series of delays that have characterised the Botswana Telecommunications Corporation Limited (BTCL) share sale will not dampen punters to participate in the process when it opens during the festive season.
Top fund managers and a technical advisor of the Initial Public Offer (IPO) have commented, days after government announced the process has been put on hold, at least for now. Some commentators said delays of the IPO might lead to loss of confidence in the whole process. “Those who want to buy will still buy when the IPO opens,” explained Carol-Jean Harward, a portfolio manager at African Alliance Asset Management.
The IPO was supposed to have gone live last week Friday. Government has since deferred the share sale, citing lack of preparedness and general understanding of the capital market by ordinary citizens, to which the offer is intended. “Participation on the process (of IPO) will depend on what is there to buy,” stressed Harward, whose firm manages millions of Pula in clients’ funds. Amit Bakhirta, a fund manager at IPRO Botswana concurs with his counterpart. “I doubt the delay will affect the IPO. Public campaigns for the share are ongoing which are intended to cover as many people to participate during the open period,” he said on Wednesday.
BTCL value, share price unknown
One other factor, which has put investors-both retailers and institutional-in a jittery mode, is that the actual value and price of the shares are yet to be determined. “All this information will be contained in the IPO when it comes out,” remarked Bakhirta. According to BTC annual report for 2012, total assets of the group stood at P2, 3 billion. However, this was before the split of assets to form Botswana Fibre Networks (BOFINET), a state-owned telecoms infrastructure company. A Company’s total assets is the factor to determine share price. Speaking to Botswana Guardian on Wednesday afternoon, Bakhirta said some institutional investors might, in the absence of a share price try to work its possible value. “They may (investors) use its previous performance and come with a certain price to guide them,” he said. The absence of its value or share price can create anxiety. “If someone knows how much the price will be, then they can budget for such shares,” she said recently.
In a previous interview, Rizwan Desai, a technical advisor to the IPO process refused to discuss or disclose the initial share price of BTCL, insisting such disclosure is tantamount to insider trading. Insider trading is the trading of a public company’s stock or other securities (such as bonds or stock options) by individuals with access to non-public information. Most analysts agree that regardless of the share price of the IPO, investors are always looking for diversity in their investment instruments. “The market is currently dominated by financials and banking stocks,” said Bakhirta, whose company manages assets running into billions of Pula.
According to data sourced from the stock exchange this week, of the 23 listed counters on the domestic board, seven of them are in the banking and financial services industry. Depending on the set price, investors will most likely add a telecommunications stock on their respective portfolio. If BTCL market capitalisation exceeds 5 percent of the issued share capital at the domestic board, then it will make a worthwhile buy, opined Bakhirta. “Telecommunications companies, especially those backed by governments have been successful,” said the fund manager. “Just look at MTN (South Africa).” MTN is a South African-based telecommunications company listed in the Johannesburg Stock Exchange (JSE). It counts government as one of its shareholders. While there is anxiety ahead of the BTCL share sale, some of the investors might adopt ‘wait and see’ approach and only participate when the company gets listed.
Citizens broke to buy BTCL shares
Among the reasons that government has cited for delaying the IPO process is that citizens have ‘requested ample time to organise funding’. Some analysts have been quoted as saying the household debt that is currently choking consumers will have adverse impact on the share sale when it opens, as it will coincide with the Christmas spending spree. Bakhirta disagrees. “Most IPOs have been successful here,” he stressed.
The market has warmly welcomed recent listings of Choppies and New African Properties (NAP). Desai, who is a part of Collins and Newman and Deloitte (CND) consortium that advises on technical matters of the BTCL privatisation, said the decision to stop the share sale was done in the best interest of all. “The decision was taken by government to allow further dissemination of information on the IPO,” he disclosed. He added that, the delay would allow more people to benefit, resulting with the success of the share sale.
BTCL IPO, the Alibaba of Botswana?
According to a press statement from transport and communications ministry, the launch of the IPO will take place before New Year’s Eve. The period of the share sale will be eight weeks, which automatically rules out any listing this year. Some have envisaged the BTCL share sale to be as successful as that of Alibaba, looking at the local context. Alibaba is a Chinese online retail giant which holds the title for the biggest IPO to date. BTCL is the first government owned parastatal to go private (partly). Secondly, it will be the first telecommunications company to list. Mascom and Orange are unlisted in Botswana. Once opened, the BTCL IPO will allow citizens to buy as much as 49 percent of the company.
BSE listing and trading manager, Tsametsi Mmolai said they welcome any listing, insisting they have met with BTCL officials on possible listing but no approval has been made as yet. BSE has not listed any new company last year. Some companies, such as African Banking Corporation (ABC) will soon delist from the bourse, leaving the domestic board with 22 counters.