Fund managers await BTCL shares sale

Fund and private wealth managers are waiting with bated breath for the release of Botswana Telecommunications Corporation Limited (BTL) Prospectus which will provide ‘never seen before’ corporate details of the privatised corporation.

Institutional investors polled by Botswana Guardian on Wednesday stopped short of openly admitting that this ‘is the stock they have been waiting for’. However, before they can invest their clients’ funds in the Initial Public Offer (IPO) of the country’s biggest telecommunications company, they need an assurance of what kind of stock they will be buying.

“Before we can comment on whether the share price is attractive, we need to see the Prospectus first. This is when now we can see if this price of P1, 00 or value of P800 million is really what they say it is,” said Justin de Klerk of African Alliance asset management division. “We need to see what we are getting.”

The IPO Prospectus will contain the company directors, its financial history (minimum three years), its services, valuers, brokers, legal advisors among others. In a development that shows that government is serious about letting go part of BTCL after several delays, it stated that BTCL is currently valued at P800 million. It said its share price (for the IPO) will be set at P1, 00. However, while investors appear excited that BTCL will finally float part of its shares, they said the devil is in the detail.

An investment analyst at private wealth management firm, Blackthread Capital, Karabo Tladi told Botswana Guardian that, “Chances are government has deliberately underpriced BTCL shares so as to allow room for growth.” Nonetheless, Tladi said that at P1, 00 the price is ‘fair’, as government wants as many citizens to take part in the IPO. “The price is fair, especially for retail investors,” she stressed. The company he works for manages wealth on behalf of clients.

Clare Mathe-Lisenda concurs with de Klerk and Tladi. “We have not received the Prospectors, so we don’t have much to say about the IPO,” said the Senior Manager: Investment Management at IPRO Botswana. IPRO is an Africa-focused investment specialist. “We work with numbers which are contained in the IPO,” stressed Mathe who has worked for Botswana Public Officers Pension Fund (BPOPF). A source told Botswana Guardian this week that, the Prospectors will be released as early as next week.

In an exclusive interview, Transport and Communications minister, Tshenolo Mabeo could not be drawn into the date of the IPO. “We want to launch the process (of the IPO) before the end of December,” disclosed the minister. The IPO is launched at a time when most prospective consumers and investors have already committed their funds for the December period.

Mabeo said he is aware of that and the IPO will run for eight weeks, with possible extension so as to ensure all interested parties are given a fair chance of taking part in the whole process. Previous valuations of BTCL stood at well over P2 billion. Is the current P800 million a fair value of the government parastatal?

“Remember, at some point some assets of BTCL were separated to form BoFiNet. This means some of these assets have been transferred to the new entity. In valuing BTCL we have appointed a team of professionals. Who am I to doubt them?” asked the minister rhetorically. BoFinet is a government-owned company, which sells wholesale telecommunications services to providers in the country.

The IPO process of BTCL has been rigorous. Relevant stakeholders such as Botswana Stock Exchange (BSE), PPADB, BTCL, finance and development planning ministry, have been consulted, said the minister. The BTCL listing has been delayed for several years now. The completion of the valuation of the fixed and non-fixed telecommunications company paves way for its subsequent listing at the BSE.

The actual listing is likely to be conducted in the first quarter of 2016. It will be the first of its kind in which a government entity is being part-sold under the privatisation process. Under the approved BTCL Transitional Act, 49 percent of the company will be ceded to local investors.

IPO or stock market launch is a type of public offering in which shares of a company usually are sold to institutional investors that in turn, sell to the general public, on a securities exchange, for the first time. Through this process, a private company transforms into a public company. Companies to raise the expansion of capital, possibly to monetize the investments of early private investors mostly use initial public offerings, and to become publicly traded enterprises.

A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors. Although IPO offers many advantages, there are also significant disadvantages, chief among these are the costs associated with the process and the requirement to disclose certain information that could prove helpful to competitors. The IPO process is colloquially known as going public.