The closure today (5 February at 5pm local time) of the share offer of Uganda’s National Insurance Corporation Limited (www.nic.co.ug) is likely to result in a rush for shares. It is the first listing on the Uganda Securities Exchange (www.use.or.ug) since 2006 and the amount on offer is small, totalling 161,552,000 ordinary shares – 40% of the issued share capital – at a price of Uganda Shilling (UGX) 45 or 2 US cents per share.
The total amount is UGX7.3 billion (US$3.7 mln).
The sale of shares is by the Government of Uganda, which says the price is subsidized. Ugandans get priority and the minimum purchase is 2,000 shares.
According to the NIC website: “This IPO marks yet another milestone in the deliberate use of the divestiture process in Uganda as a core catalyst for the development of the capital markets in the country.
“The Government of Uganda has to-date privatized 6 of Uganda’s successful public companies by way of IPOs. The companies namely are; – Uganda Clays Limited (UCL), British American Tobacco Uganda Limited (BATU), Bank of Baroda (U) Limited (BOBU), DFCU Limited, New Vision Printing and Publishing Company Limited (NVL), and Stanbic Bank Uganda Limited (SBU).”
4% of the issued shares has been reserved for the permanent employees of NIC at the IPO price.
In June 2005 the Government had sold 60% of the shareholding in NIC to Industrial and General Insurance Company Limited (lGI) of Nigeria (www.iginigeria.com), a leading West African insurance company, after a bidding process. NIC was set up in 1964 by Act of Parliament.
According to a report in The East African, Joseph Kibuuka, a research and market development officer at Crested Stocks and Securities, says: “This IPO is not the most exciting we have had. But the market was hungry for something to reignite it and NIC has provided that.”
One question mark in investors’ minds had been outstanding debts of UGX17.7 billion accrued in handling Makerere University’s Deposit Administration Plan – a staff retirement scheme – between 1996 and 2005.