Rwanda: Bank De Kigali Gains 4.8 Percent On Market Debut

Bank de Kigali's share price rose by 4.8 per cent on the first day of trading at the Rwanda Stock Exchange, driven by high demand for the stock from investors who missed out on the IPO applications. The share shot up to Rwf131 from the initial public offering (IPO) price of Rwf125 amid limited supply of the stock as investors watched to see the direction the stock would take.
There was a limited supply of 1,100 shares in early morning trading, which saw the stock touch Rwf200 before easing off as a total of 4.1 million shares changed hands.
"It started at Rwf200 but it is now trading at Rwf160," said Sheema Shah, wealth manager and equities dealer at Dyer and Blair Investment Bank.

Kenyan retail investors took up about a quarter of the shares alloted to the retail pool, according to arrangers of the share sale.
The opening price has given Rwanda's biggest bank a market capitalisation of KSh6.15 billion (Rwf39.66 billion), up from the IPO valuation of Rwf34.8 billion. Beer maker Bralirwa, which became the first Rwandese company to be listed on the Kigali bourse, has a market capitalisation of KSh4.9 billion (Rwf31.6 billion).
Analysts said that the share price increase on day one of trading was expected given the high foreign investor participation and the use of a "market driven pricing model" to set the IPO price.
"They did book building with a lot of focus on foreign investors even before the IPO opened so the offer price and other things were market driven," said Renaldo DeSouza, a research analyst at Genghis Capital.
Foreign investors were alloted 40 per cent or 120 million shares of the 300.3 million shares that were on offer.
This pool was over-subscribed by 330 per cent.
This over-subscription was a sign that the price would rise on the first day of trading.
"Yes, we were expecting it to rise given it was three times oversubscribed. However, one can never be sure given the current global economic back drop," said Renaissance Capital (East Africa) chief executive Patrick Mweheire.
The bank's decision to give foreign investors the biggest block is meant to attract foreign investment to Rwanda and the accompanying transfer of technology, know-how and to develop and promote Rwanda's young capital markets.
Overall there was an average over-subscription of 284 per cent with nearly a quarter or 1,527 retail investors being Kenyan. Investor nostalgia from the Bralirwa IPO nearly nine months ago also worked for Bank de Kigali, said Cynthia Omondi, a research analyst at African Alliance Investment Bank.
Bralirwa' share price has risen by 80 per cent to KSh38 from KSh21 when it was sold to the public in December 2010."It is Rwanda's biggest bank and most of its ratios look good," added Ms Omondi.

The bank also operates in a country whose GDP has grown by an average of 7.2 per cent over the last five years and while this is expected to grow at 6.7 over the next five years, the rate is still "impressive" according to the African Alliance researchers.
"Rwanda's GDP growth has averaged 7.2 per cent between 2005 and 2010, more than 1.3 times the sub-Saharan African average," says the research note.
The weakening Shilling against the Rwandese Franc (Rwf) is has slowed sell offs by Kenyan investors.
Since the beginning of the year, the Shilling has depreciated by 13 per cent against the Franc from Rwf7.37 to Rwf6.13 by yesterday.This means that an investment worth Rwf100,000, all factors remaining constant, is now Sh15,000 from Sh13,000 in January.Bank de Kigali was scheduled to start trading on Monday but was pushed to Thursday, September 1 2011..