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December 27, 2006

IPO Fever Hits Africa: Stanbic Uganda

posted by MR WAVETHEORY at 12/27/2006 10:31:00 PM
I just came across an interesting article on how investors in Africa have caught IPO fever. Stanbic Uganda, the largest bank in Uganda, recently completed its initial public offering and it attracted a large amount of foreign interest from investors in Kenya - the newspapers are saying that more punters, aka speculators, from Kenya bought the IPO, than actual Ugandans.

The IPO was priced at Shs70 ($0.04). That's right $.04. The bank sold 1 billion shares and the deal closed right before the Christmas holiday on December 22nd. Before the Internet, Stanbic started out as a bank that ferried cash around its banks using taxis. Nice huh?

Stanbic Bank in Nairobi.

The operational risks were immense. Cash had to be moved by staff throughout the country by any mode of transport including taxis; reconciliations were done manually and frauds were frequent.

The IT strategy did wonders. Within a short period, all branches were converted to the Bankmaster software, which made it possible to network all branches. Its ATMs were rolled out in a massive way, making Stanbic the first bank to introduce ATMs in the rural areas.

Uganda has a relatively small banking sector comprised of 15 commercial banks, two development banks, over 80 forex bureaus, six credit institutions and 100 microfinance institutions.

Stanbic Uganda is a subsidiary of Standard Bank Group of South Africa - Africa's largest banking group with operations in 17 countries outside South Africa. The Group is also represented in 22 countries outside Africa.

The group's relationship with Uganda started in 1992 when Stanbic Bank Group, through Stanbic Africa Holdings, acquired the Grindlays Africa network.

Stanbic Bank Uganda was 51 per cent owned by Grindlays. In 1996, the government of Uganda sold its 49 per cent shareholding in the company to Stanbic Africa Holdings Ltd.

Total loans and advances are $694 million, while total customer deposits are at $1.141 billion and total banking assets $1.79 billion.

How to Buy Shares?
The Ugandan stock exchange has 9 stocks listed if you count Stanbic Uganda. You can see it is not particularly active or liquid. In fact, the stock exchange trades 2 times each week from 10 am - 12 pm on Tuesdays and Thursdays.

19 December, 2006 Bank of Baroda Uganda Ltd 0 0 Ushs. 1,000

19 December, 2006 British American Tobacco Uganda Ltd 0 0 Ushs. 470

19 December, 2006 DFCU Limited 3 1,692,062 Ushs. 420

19,December, 2006 East African Breweries Limited 0 0 Ushs. 3,679

19, December, 2006 Jubilee Holdings Limited 0 0 Ushs. 9,001

19 December, 2006 Kenya Airways 0 0 Ushs. 3,000

19 December, 2006 New Vision Printing & Publishing Company Ltd 0 0 Ushs. 435(ex)

19 December, 2006 Uganda Clays Limited 2 750 Ushs. 2,300

The broker managing the IPO is MBEA. (Details of the deal.) Shares start trading on January 15, 2007.

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