Africa: Will Vodacom Allow Foreigners to Buy Shares After Missing Target?

5 May 2017

Mergers, Acquisitions and Financial Results

Vodacom Tanzania Plc, which recently offered 25 per cent of its shares in an initial public offering, has failed to meet the set threshold, raising questions about the ability of Tanzanians to absorb shares of the country's largest telco.

The IPO, offered on March 9, closed on April 19 and failed to raise the Tsh560 billion ($248.5 million) exclusively allocated to Tanzanians.Vodacom Tanzania, a subsidiary of Vodafone Group, on April 19, extended the offering for three more weeks to give time for investors to purchase the shares.

"This extension will help ensure full participation by retail and institutional investors, who have requested more time," said Vodacom Tanzania corporate affairs and public relations director Rosalynn Mworia. "We thank all Tanzanian investors who have participated in the initial offer to date and look forward to welcoming new shareholders."

The failure by the telco to raise the targeted capital has revived memories of the 2011 Precision Air IPO.

That year, the privately owned airline issued an IPO, seeking to raise Tsh28 billion ($16.5 million) to expand its routes and purchase new aircraft, but only managed Tsh11.84 billion ($5.25 million).

In the case of the Vodacom offering, market analysts cite overpricing of the company's net asset value.

The Tsh476 billion ($212.8 million) offer is about 25 per cent of the company's Tsh1.9 trillion worth ($844.9 million).

But experts say that if the IPO fails to hit the target, it will not necessarily hurt Vodacom, but the share buyers. Read the full article in The East African here.