Bosco Hitimana

KIGALI, RWANDA - Individual and institutional investors in Rwanda have been offered to buy few shares leaving majority to foreigners in the country's largest and first Initial Public Offering (IPO). The government is offering the public 25% of its 30% stake in the leading beer and soft drinks maker and distributor -Bralirwa S.A.

The government says the IPO will raise locals' levels of participation at the capital market leading to increased savings for long-term investment.

The Bralirwa IPO is expected to be launched on the primary market at the Rwanda over the counter (OTC) before the month ends, according to a Rwandan official. Shares will start trading on the secondary market after one month. The Minister of Finance and Economic Planning John Rwangombwa is yet to release the prospectus showing the share price and total number of shares to be offered.

Out of a stake of 25% for sale, only 41% is available for individual and institutional investors in Rwanda. Foreigners have been offered to buy 59% of the 25% stake on offer.

Out of 41% for Rwandan investors, the staff and distributors of Bralirwa have been offered to buy only 5%, according to the chair of the Capital Markets Privatisation Committee, Mr Vincent Munyeshyaka.

He said Rwandan retail or individual investors are entitled to buy only 21% out of 41% shares.

Qualified institutional investors operating in Rwanda have been offered to buy only 15% of 41%, Mr. Munyeshyaka said.

He said residents of Uganda, Kenya, Tanzania and Burundi are entitled to buy 14% out of 59% available for non-Rwandan nationals. Qualified Institutional investors from Uganda, Kenya, Tanzania and Burundi have chances to walk away with 15%, the same amount their counterparts in Rwanda will gain.

The winners in this IPO are 'international investors' who will walk away with 30% of 59% shares entitled for foreigners. Munyeshyaka said that international investors are investors outside the East African Community (EAC).

He said the distribution of shares to the respective categories is based on the market assessment carried out by the advisors.

He said retail and institutional investors from EAC have been categorised as domestic investors and they will buy shares at the same price as Rwandans. This is because of the recently signed EAC common market protocol.

"By the Common Market Protocol, EAC have to be treated like domestic investors," Mr. Munyeshyaka said in a telephone interview last Tuesday. Meanwhile, allocation of fewer shares to Rwandan retail and institutional investors has raised concerns. Initially, the government's goal was to list its shares in Bralirwa and other healthy companies to raise locals' participation at the 33-months old capital market.

Locals could get majority shares as an incentive to raise their low level of participation in the capital markets. Their increased participation was expected to raise levels of long-term savings for long-term investment.

However, with Bralirwa IPO, it is evident that locals have been offered few shares. This could hinder their expected levels of participation at the capital market. Although allocating more shares to the foreigners would eventually result into increased business activity at the bourse, the government's goal to attract more locals on the market remains unachieved.