Thursday, February 9, 2023

Barclays calls special AGM on share split

Barclays Bank of Botswana, the giant retail bank in the country, is to call a special AGM in the next four weeks where it will ask shareholders to approve the proposed share split given thumps up by the stock exchange.

The move, which is expected to give retail investors a window to plug into the financial market, will be on a ratio of five-for-one.

The share split decision was prompted by a spike in its share price triggered by a single trade of 10,000 shares nearly two weeks ago to a record high of 4100 thebe or 37 percent.
The jump set the market on a record high with its value moving up by nearly P 2 billion to P 23.5 billion.

“The big task now is to call an AGM as per the requirements of the stock exchange. I think that will take place in the next 21 days, which gives us time to end of November or early December,” Geoff Bakwena, Chief Executive Officer of Stockbrokers Botswana, which is the sponsoring-broker of the deal, said.

Barclays’ decision has won approval of market commentators who have seen its share price boiling to the top in the two months.

“I think this is good for the market in a number of respects. Firstly, it will improve the tradability of the company and also allow retail investors to buy.

It also means that there will be a share multiplication,” Gregory Matsake, a trader at Capital Securities said Friday.

“ It looks like there is a strong demand for the blue chip companies especially for the banking sector,” Alphonse Ndzinge, an analyst at Investec Asset Management Botswana, said before Barclays announcement.

Analysts across the board cheered Barclays’ late Friday announcement saying that the move was long overdue and would improve the stock’s tradability. However, those who expected 10-for ÔÇôone share split were frustrated by the government’s snail pace move of signing the new act on nominal value. The law is intending to allow companies to have nominal value of less than one thebe.

The Bank of Botswana decision to restrict the trading of BoBcs to the banking sector, the foreign currency trading spread ÔÇö among the commercial banksÔÇöand improving inflationary outlook, coupled with the hope of improved corporate lending, are being attributed to rally in the banking sector share price.

The move has pushed up the banking sector’s average price earning ratios to about 22 times against the market average of 16 times. Barclays remained at the top at PE of 26 times.

“I think the liquidity is tight and Barclays’ valuation are now stretched. And it makes it difficult for retail investors to get in. One will need P 4.100 to enter the market,” Ndzinge added.

The move by Barclays also means that the banking sector PE has moved up by 50 percent from 14.5 times ÔÇô nearly five years ago ÔÇô to 22 times.

The entire banking sector released strong results for both year-end and mid year recently, which were largely attributed to their treasury departments.


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