Thursday, October 22, 2020

Inside BTCL‘s process of crafting and executing corporate Strategy

Following its listing on the Botswana Stock Exchange (BSE) BTCL sent out a number of company announcements. The first notice dated 14 April 2016 communicated that BTCL had appointed a new Transfer Secretary PriceWaterHouseCoopers (PwC) whose appointment was expected to come into effect two weeks following the date of communication. The announcement came directly from BTCL. What is unusual is that a new transfer secretary who takes over from Corpserve Botswana was appointed at a post listing stage which expert analysts consider less demanding compared to the convoluted processes that are carried out during and up to listing. 

According to analysts a transfer secretary undertakes such processes as registration of the shares, allocation of the shares and vetting which in the case of BTCL was a very important task given that the shares had been positively discriminated towards only citizens. To support this, experts that dissected the process of listing at the recent BSE listings conference described it as “highly technical, lengthy and complicated” process which goes through various stages such as due diligence which prepares the company for the purpose of listing and disclosure requirements which prepares the company’s prospectus. The processes during and up to listing were set out by the experts as the true heart of the IPO. The key requirements of a successful IPO which were outlined at the BSE listings conference include among others oversubscription and full regulatory compliance. 
Measuring Corpserve Botswana by such standards, which BTCL achieved, it could therefore be suggested that it led BTCL to a successful IPO.  The anomaly with the appointment of PcW is that it comes post listing which counts as a less complex stage of adjusting compared to the fundamental role which Corpserve Botswana undertook in crafting a successful listing process. Corpserve Botswana was paid P480 000 for the service it provided to BTCL as stated in the prospectus.      

Two weeks later from the first notice, on 28 April 2016, BTCL informed the public of a trading halt which it communicated was due to changes that had to be made to the Employee share Trust. The statement cited that the halt would be lifted once the company had published details of the changes. The announcement was made by the BSE Listings and Trading Manager. The Trust had initially been under the management of trustees appointed by the Company on behalf of employees. Employees were previously not permitted to dispose of the 5 percent shares and the dividend payout was structured such that they were payable into the Trust following which distribution by Trustees would be done in terms of the Trust Deed. BTCL informed Sunday Standard that “the decision to change the ESOP was taken by the shareholder in consultation with stakeholders.”

The next day, 29 April 2016, BTCL released a cautionary statement which further explained the alteration of the terms of the Employee Share Trust.  The statement cited that the objective of the alteration was to permit BTCL employees to directly own BTCL shares thus granting them full voting and profit participation rights, together with the ability to buy and sell BTCL shares generally, as distinct to the limited ownership rights in terms of the original Trust. The communication advised shareholders to deal cautiously with BTCL shares until a detailed announcement was made. This statement was released by Imara, identified in it as BTCL’s Sponsoring Broker. On the same day, the BSE Listings and Trading Manager communicated the removal of the trading halt that had been placed on the BTCL shares the previous day. BTCL appointed Imara as its new sponsoring broker but what is atypical is that Imara released a statement identifying itself as a the sponsoring broker before BTCL could make an official announcement that it had appointed it to take over from its initial sponsoring broker Stockbrokers Botswana. Responding to this publication’s question on the reasons why the initial sponsoring broker could not continue to provide its services to the company post listing BTCL said “As stated in the public notice,   the initial stock broker and transfer secretaries, were engaged during and up to the period of listing by the project manager (PEEPA). Post listing BTCL invited stock brokers and transfer secretaries to quote for their services. The most competitive service providers were engaged.” BTCL was also not drawn into discussing how it arrived at the conclusion that it should engage a new stockbroker and transfer secretaries post listing. According to the prospectus, Stockbrokers Botswana was paid P320 000 for the service it provided.   

The following week, on 4 May 2016, BTCL released a public notice expressing concern regarding what it deemed unbalanced and misleading media reports that seemed to suggest that the company was in a crisis. The company stated that the media reports attributed the crisis to internal squabbles resulting in the sacking of the initial stockbroker and transfer secretaries without any proper explanation. “This could not be further from the truth. There are no internal squabbles at the Organization and BTCL is not in a crisis,” it asserted. It presented a number of statements which it described as facts. The first of its facts stated that the initial stockbroker and transfer secretaries were engaged by the IPO Project Manager (PEEPA) during and up to the period of listing, the second of those facts was that post listing, it declared to have followed due process and procured the services of a new broker and transfer secretaries and the other facts reiterated the announcements mentioned above. 

With regards to other services providers such the Legal advisors, financial advisors and Communication advisors that had been engaged to assist, BTCL told this publication that  “some of the other  service providers  you mention,  were  engaged  by the project manager  and BTCL  during and  up to the period of listing. And where their services are required in relation to closure of outstanding issues, post listing, BTCL shall follow its procurement process.”  

BSE, as indicated in the IPO Watch 2014 compiled by PwC, listed a total number of five IPOs over a period of five years between 2010 and 2014. It listed two companies in 2010, another two the following year and the next year only one. In 2015 it listed one company and in early 2016 the number increased by one when BTCL entered the market. In the history of IPOs in Botswana, an occurrence of such an immediate replacement of the transfer secretary and sponsoring broker has never been observed. BTCL’s uniqueness has clearly been demonstrated by the changes it has made so far.     

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