Dar bourse new window starts with big bang

The Maendeleo Bank Initial Public Offer (IPO) oversubscription has been described as a testimony catalyst that start-up companies can now raise the required capital through the alternative window at the Dar es Salaam Stock Exchange (DSE).

The bank, the first startup business to attempt to raise capital via DSE second window - Enterprise Growth Market (EGM), saw its equity oversubscribed by 1.2 million shares.

The Premier, Mr Mizengo Pinda, said when launching the EGM that 9.2 million shares were sold during the IPO against 8.0 million the company had put on offer.

“Allow me to congratulate the Maendeleo Bank for taking the initiative and for leading the way and enabling the bank to have a successful IPO,” Mr Pinda said amid cheers.

The PM said the financial sector borrowed a leaf from London’s Alternative Investment Market (AIMS) which has enabled multinational corporations to raise capital for expansion through the bourse.

“This way will also enable the ordinary Tanzanians to own stake in big companies and participate in big businesses and indeed trickle down effects will be felt in our economy,” Mr Pinda said.

The UK Secretary of State, International Development, Ms Justine Greening, said it is the capital markets that mobilise longterm finance for the public and private sectors and also drive improvement in social welfares.

“And they (stock markets) give people, through owning shares, a stake in economic growth,” Ms Greening said prior to the launching of the EGM. 

She added: “(DSE), when properly developed has the potential of transforming the Tanzanian economy.”

Soon after the PM launched the EGM by ringing a bell, the price of Maendeleo Bank’s share rose to 600/- from 500/- of IPO on the background of the oversubscription.

The Maendeleo Bank Managing Director, Ibrahim Mwangalaba, told the ‘Daily News’ all share were sold resulting to the oversubscription of 1.2 million shares, thus permitting the green-shoe option.

“We had a green-shoe option and we utilise it by taking the addition shares instead of returning to the subscribers,” Mr Mwangalaba said.

The Financial Sector Deeping Trust, Technical Director, Mr Sosthenes Kewe, said the journey of bringing at least 10 per cent of the country’s three million SMEs to the bourse has begun.

“The challenge now is to bring at least 10 per cent of SMEs to the EGM and image its impact to the GDP,” Mr Kewe said. 

The establishment of the EGM is a result of recommendations of a study conducted by the CMSA on the appropriate capital markets structure for Tanzania in its efforts to develop and strengthen the capital markets.

The EGM is expected to create vibrancy on capital markets and facilitate implementation of national policies aimed at economically empowering Tanzanians.

It estimated that SMEs are contributing between 30 and 35 per cent of the country’s GDP and employing between 20 and 30 per cent of the labour force - thus ranked the second employer, after agriculture.
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania
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