Based on the key requirements that dictate the success of an initial public offering (IPO), amongst them oversubscription, Botswana Telecommunications Limited (BTCL) IPO can in terms of offers submitted be confirmed a success.
Oversubscription refers to a situation in which the number of buyers who applied for share application forms exceeds the number of shares on offer. According to Kgotla Ramaphane, Chief Executive Officer (CEO) of the Public Enterprises Evaluation and Privatisation Agency (PEEPA), early indications following the close of the BTCL IPO offer period on 4 March 2016 suggest that the IPO will be oversubscribed.
In a statement released on Monday regarding the BTCL IPO, Ramaphane is quoted saying: “We have received offers for the 462 million shares that were available; meaning that we have managed to raise P462 million. The total offers received are well in excess of this figure and thus we anticipate an oversubscription. This is a very humbling endorsement by Batswana who believe in what will become their business: BTCL. It also testifies that Batswana have accepted and embraced the privatisation agenda that PEEPA is driving on behalf of government.”
Since the offer period opened on 11 January 2016 the submissions for offers to buy the Corporation’s shares had from time to time been described in terms of record breaking numbers. In the first month of the offer period it was reported that over 10,000 applications had been submitted, to which it was indicated that on average over 1,000 applications were received per day. In the second month applications were estimated to have doubled. The recent statement announced that applications exceeded 40 000 following the close of the offer period. It can be deduced from these figures that the count of submissions progressively doubled on each month of the offer period.
“To put this into context, one needs to consider that prior to the IPO the BSE had in the range of only 20 000 CSD accounts. We have at the very least doubled the number of people who participate in BSE listed shares as a form of wealth creation,” BTCL Chief Operating Officer Anthony Masunga is quoted saying. “Even more satisfying is that this double up is made up of Batswana 100%.” The Central Securities Depository (CSD) account provides statements to each investor reflecting the number of BTCL shares they own.
Other requirements which reflect the success of an IPO as cited at the inaugural Botswana Stock Exchange (BSE) listings conference held last week Thursday include high quality shareholder base, full regulatory compliance and after market liquidity and stability to mention but a few. In the case of the BTCL IPO the shareholder base was restricted solely to Batswana, of which priority was given to individual Batswana as opposed to institutional entities. When it finally lists on the local bourse on 8 April 2016 the BTCL is anticipated to improve liquidity because of the expected increase in the number of investors that will participate in the buying and selling of shares. Should BTCL IPO tick all the boxes, it will automatically be considered successful.