Business and Finance
Umeme to mobilise development funds from Uganda, Nairobi stocks
Umeme, plans to mobilise a capital boost from both the Uganda and Nairobi stock exchanges this year as it seeks to finance the development of Uganda’s electricity distribution network.
Mr Charles Chapman, the Umeme managing director, told Daily Monitor at the weekend the funds to be raised through an Initial Public Offering (IPO) the funds will also finance other projects, including the establishment of a prepayment metering system and energy loss reduction to meet new regulatory targets.
However, when asked about when the company intends to go public and how many shares it intends to float, Mr Chapman remained tight ripped saying regulatory measures could not allow him to disclose such details.
He nonetheless said the power vendor intends to will list its minority shares. Umeme, which holds a 20-year electricity distribution concession, was recently tasked with lowering power losses from the current 27 per cent, bringing power tariffs to affordable rates as well as increasing electricity distribution in the country.
“With the recently agreed regulatory targets and the increased availability of power, we believe the timing is right. Customers and employees will also have the opportunity to share in the profits of the business,” Mr Chapman said.
He added the listing, which still awaits approval of market regulators in both countries, will make the power distributor stronger, more transparent and accountable to customers and shareholders.
Mr Japheth Katto, the chief executive officer Capital Markets Authority, said it was premature to comment about the upcoming Umeme IPO saying the process is still in its early stage.
He, however, said all concerns will be addressed in a prospectus, indicting the opportunities and risks to enable investors make informed decisions before buying into the company.
Umeme has appointed Stanbic Bank (Uganda) as transaction advisor and African Alliance (Uganda) as sponsoring Broker. Mr Kenneth Kitariko, the African Alliance boss, said the Umeme IPO will ignite interest and activity on the local bourse, adding the market has been yearning for another listing since the National Insurance Corporation IPO.
The Uganda Securities Exchange executive director, Mr Joseph Kitamirike, said depending on how many shares Umeme plans to list and how much capital it intends to raise, the IPO will help boost activity on the bourse.
If it floats shares, the Umeme IPO will be the second Ugandan share sale to be opened to Kenyans after the 2007 Stanbic Uganda offer.
It will also be the eighth firm to float shares on both USE and NSE and the 15th firm to list on the local bourse, providing domestic investors with more alternatives.
The power distribution is 100 per cent owned by Actis, a private equity fund.