TIC, DSE bosses upbeat on CRDB Bank PLC going public

The Tanzania Investment Centre (TIC) and Dar es Salaam Stock Exchange (DSE) are optimistic that last week`s decision by the CRDB Bank PLC on initial public offering (IPO) will empower more Tanzanians economically.

Executive Director at TIC Emmanuel ole Naiko described Tuesday in a telephone interview that a move by Danish International Development Agency (DANIDA) to sell its five per cent stake in the CRDB Bank to the public in April, as right decision toward empowering indigenous people.

The CRDB Bank Managing Director, Dr Charles Kimei, told shareholders at an extra-ordinary general meeting held last Saturday that initially, DANIDA Investment Fund (DIF) invested heavily in the bank to boost its capital subject to pulling out later because the money is an aid to the government.

DIF will sell over 98.9 million shares being part of its 30 per cent stake in CRDB Bank PLC. Dr Kimei was responding to some shareholders concerns that DIF has not honoured a request made by them to be given priority when the institution wants to sell its shares.

Management`s proposals offer rights issue and bonus shares to all founder shareholders and DIF its right to offer its five per cent of shares to the public as part of it`s plan to pull out gradually from the bank and focus on core activity which is assisting the government.

According to TIC boss, CRBD Bank PLC has so far been at the forefront in providing loans to Tanzanians and so DANIDA`s plan to float part of its stakes to locals would further consolidate participation of the bank in economic empowerment of Tanzanians.

CRDB Bank extra-ordinary general meeting last Saturday in Arusha made this bold move during which shareholders agreed that over 197.8 million rights issue shares should be sold to founder shareholders while another 247.3 million bonus shares should be given to the same group for having remained faithful to the bank.

In capital markets, rights issue refers to the raising of new capital by giving existing stockholders the right to subscribe to new shares or debentures in proportion to their current holdings.

These stocks are normally issued at a discount to market price. A stockholder not wishing to take up a rights issue may sell the rights.

On the other hand, a bonus share is a free share of stock given to current shareholders in a company, based upon the number of shares that the shareholder already owns.

However, although the issue of bonus shares increases total number of shares issued and owned, it does not increase the value of the company.

Although total number of issued shares increases, the ratio of number of shares held by each shareholder remains constant, according to various wire sources
As more shares are made available for public acquisition, Naiko said that Tanzanians would start changing investment attitudes towards diversification of portfolios, say from just thinking about building hotels and guest houses to investing in public companies.

* SOURCE: Guardian