Tanzania: Mwalimu Bank IPO over subscribed by 24pc

Mwalimu Commercial Bank (MCB) initial public offer (IPO) has been oversubscribed by over 24 per cent and the bank takes all the excess shares —under green shoe option.

MCB, the first ever institution in the world by teachers, wanted to raise 25bn/- as a capital to establish the bank but it received 31bn/- in an IPO that was closed in the first week of this month.

The Chief Executive Officer of Core Securities, the sponsoring broker for MCB, Mr George Fumbuka (pictured), told the ‘Daily News’ that they had indeed expected over subscription of the IPO.

He said as a result of oversubscription, the green shoe option would be applied so that all who bought shares of the bank should get their requirement in full.

“It was a great IPO and we thank the promoters and the issuer for the tremendous job,” he said. The bank prior to IPO had at hand 17bn/- and wanted to raise another 8.0bn/- to have a total of 25bn/- as a starting capital.

Bank of Tanzania capital threshold is 15bn/-. Earlier, Mr Fumbuka told ‘Daily News’ that in case of the oversubscription, MCB has green shoe option — to take excess shares — for 10bn/- worth of shares.

“If there is still oversubscription after applying the green shoe option, the shares on offer will be allotted to applicants pro rata,” Mr Fumbuka said. 

Capital Market and Securities Authority Principal Public Relations Officer Charles Shirima said the bank listed date is as planned in June 8.

“So far no changes for the listing date on DSE (Dar es Salaam Stock Exchange),” Mr Shirima said, “they (MCB and sponsoring broker) are doing some back office logistics prior to listing”.

Mr Shirima added: “it was a very successful IPO.” The oversubscription was imminent as Tanzania Teachers’ Union (TTU) announced that it will spend 11bn/- for buying its each of its active members 100 shares at IPO for 50,000/-. TTU has over 200,000 active members.

The MCB share are allowed to be sold in other East African countries freely as long as this is permitted by regulatory authorities in those sister countries — Kenya, Uganda, Rwanda and Burundi.

The bank structure after the IPO will be TTU 16 per cent, Teachers’ Development Company Limited (TDCL) 4.0 per cent and the general public 80 per cent.

The dividend policy of MCB is to pay not less than 50 per cent of its profit available for distribution after making due reserves as directed by Bank of Tanzania.
Source: Daily News, reported by Abduel Elinaza, from Dar es Salaam, Tanzania
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