Rwanda: Govt to Raise Rwf25 Billion From Bank, MTN Shares

Mergers, Acquisitions and Financial Results

The Government of Rwanda plans to raise Rwf25 billion through the sale of its shares in Bank of Kigali (BK) and MTN Rwanda to increase domestic revenues, the Finance Minister said on Monday. The Treasury will include the expected proceeds in the budget for the next fiscal year.

"This is part of the Government commitment to promote accelerated economic growth under its five year plan of EDPRS but also its the approach to liberalise the market," John Rwangombwa, the Minister of Finance and Economic Planning said Monday during a press conference on the budget framework.

The Economic Development and Poverty Reduction Strategy (EDPRS), which runs from 2008 to 2012 is a medium-term strategy towards the attainment of Rwanda's ambitious long-term Vision 2020 that seeks to transform the country into a middle class economy.

Government intends to sell 20 percent of its shares in BK through an Initial Public Offer (IPO) due to be launched by July this year.

This means 45 percent of the bank's shares will be sold during the Initial Public Offer (IPO) with the bank independently offering 25 percent to the public. Government also plans to sell off its entire 66.3 percent stake in the bank.

"BK is confirmed; we are to sell our shares through an IPO. We started the process and it's expected to be concluded by September, including listing BK on the Rwanda Stock Exchange (RSE)," Rwangombwa said.

This will be the second IPO in the country following government's sale of its 25 percent shares in Bralirwa last year. The Bralirwa IPO was oversubscribed by 174 percent.

BK is Rwanda's leading bank by assets. With plans to open 44 braches across the country this year, industry experts say the bank would be an attractive stock to investors given its rapid growth and stability.

The Minister said government is in negotiations with MTN Group, which has the right to first refusal to sell the shares. South Africa's MTN Group is the majority shareholder in MTN Rwanda, where the shareholding of the Rwandan government is 10 percent.

"We have two options; if MTN gives us (Government) the price we want, we will sell the shares to them directly while the other option is through an IPO depending on the other investor," the Minister said.

Part of the government's commitment to sell its shares in major companies though IPOs is aimed at supporting the growth of the country's nascent stock exchange-the Rwanda Stock Exchange (RSE)-which was launched early this year.

Government believes that privatisation through the capital markets would increase products on the market and give investors more options, boost market liquidity and ultimately support the country's economic growth through attracting more inventors and increasing national savings.

The Rwanda Stock Exchange has so far mainly attracted Treasury and corporate bonds, and also boasts two cross-listed Kenyan companies, Kenya Commercial Bank (KCB) and Nation Media Group, with only one local listing from Bralirwa.