- P 296.8 million raised
- BancABC shares undersubscribed
After successfully listing BancABC on the Botswana Stock Exchange Limited (BSEL), the local bourse now has a total of four commercial banks trading on it.
The other three listed commercial banks are Barclays Bank of Botswana Limited, First National Bank Botswana Limited and Standard Chartered Botswana Limited. BancABC is Botswana’s 4th most profitable bank and is ranked the 5th largest by assets, based on the latest available financial statements of the other commercial banks in the industry and Bank of Botswana statistics as at 30 June 2018. A total of 725,000,000 Ordinary Shares were in issue, of which 20.5 percent (148,413,991 Shares) are held by public shareholders and 79.5 percent are held by ABC Holdings Limited. The Offer Shares went on sale at the price of P 2.00 per Share. The Offer raised P 296.8 million for ABC Holdings Limited, a portion of which will be reinvested in the ongoing efforts to develop and enhance the Group’s IT infrastructure and banking platforms.
While almost P300 million was raised, the shares in offer were undersubscribed. About 18 percent of them found no buyers by the last day of the Initial Public Offering (IPO) according to available market information indicates. This is despite Botswana Stock Exchange Limited (BSEL) granting an extension of the Offer period by another week after the IPO was reportedly met by muted interest. The extension, according to a statement by the bank cited that it was done in order to accommodate greater participation of public Investors in the Offer.
Nonetheless, the bank’s Managing Director Kgotso Bannalotlhe, says he was pleased with the results of the Offer and the strong support received from Botswana’s institutional and public investors. “We look forward to welcoming our new shareholders to participate in the next exciting growth phase of the Bank.”
BancABC acquired a commercial banking license in 2009, prior to which it was operating as a merchant bank. Research Analyst at Stock Brokers Botswana, Donald Motsumi argues that since acquiring the license, the bank’s growth to date has largely been fueled by establishing lending partnerships with public sector union schemes. Motsumi argues that with a flat loan book in the past two fiscal years, concentration of advances on personal loans to union members, relatively high cost of funding due to the deposit mix, and limited non-interest income contribution to revenue, there is need for the bank to diversify and enhance its product offerings to establish a more competitive position in the market.
“BancABC’s technology centered investments should serve to enhance the bank’s competitive position in the market. We anticipate non-interest income to be a key driver of growth as clients utilize new and enhanced product offerings on the back of these investments,” he said.