Stanbic Bank Botswana has barred its directors and executives from buying shares during the IPO’s initial stage, citing governance safeguards and their access to pricing information
BONGANI MALUNGA
Stanbic Bank Botswana has placed its own board members and executives on the sidelines of its landmark Initial Public Offering (IPO), arguing that their intimate knowledge of the share-pricing process could give them an information advantage over ordinary investors.
Speaking during the Stanbic Bank Botswana IPO roadshow in Gaborone last Thursday, Chief Executive Officer Chose Modise said the restriction demonstrates the bank’s commitment to corporate governance as it prepares to list on the Botswana Stock Exchange (BSE).
“Just to demonstrate how seriously we take issues of governance, none of our board members or executives are going to participate in buying shares at this initial stage,” Modise stated.
CREATING A FIREWALL
The decision effectively creates a firewall between those who helped shape the transaction and investors participating in the initial offer.
Modise acknowledged that senior officials within the bank had access to information surrounding the valuation and pricing of the shares, making their participation at the initial stage a potential governance concern. “We were involved in the pricing process; we have a lot of information,” he added.
The restriction is significant as Stanbic moves to open its ownership structure to the public through an IPO that will see a 20 percent stake in the bank offered to investors ahead of its planned BSE listing.
REINFORCING CONFIDENCE
By temporarily excluding insiders, the bank is seeking to reinforce confidence that directors and senior executives will not use information unavailable to the wider market to gain an early advantage in acquiring shares.
The governance safeguard comes as Stanbic intensifies its roadshows aimed at attracting Batswana investors and widening local participation in the bank’s ownership.
The IPO represents a major shift from the conventional relationship between Stanbic and its customers, allowing members of the public to move beyond being depositors and borrowers to becoming shareholders entitled to participate in the bank’s future earnings.
Modise underlined that the first test of that broadened ownership drive is ensuring that those sitting closest to the transaction do not get first bite at the shares.