Ordinary shares of the Agricultural Development Bank (ADB) are expected to be listed on the Ghana Stock Exchange today following a successful Initial Public Offer (IPO).
The IPO which closed on March 25, 2016 has been oversubscribed by 15 per cent, allowing the bank to raise GH¢300 million in primary capital, beyond the minimum of GH¢200 million it set out to raise.
Additionally, the IPO process also sold out the 48.2 per cent stake held by the Bank of Ghana, which now absolves it from being a referee and a player in the financial market. The International Monetary Fund (IMF) had advised the BoG to release its stake in the bank.
The equity was expected to be listed on April 25, this year, but was shifted to today after the securities market regulator, the Securities and Exchange Commission (SEC) extended the deadline for listing.
The IPO, according to sources close to the process, which is the single biggest capital raised on the Ghana Stock Exchange, comes with several advantages in favour of the bank and the country.
Share structure
First, the Ministry of Finance, which used to hold the majority stake of 51.8 per cent in the bank, still remains the single largest shareholder of the bank with 25 per cent stake, after its stake was diluted as it did not offer any physical cash for its stake in the bank.
In addition, proceeds from the 48.2 per cent stake the BoG held will now go to fortify the reserve position of the lender of last resort.
“The proceeds coming in are good for the economy as it will help improve the country’s debt to Gross Domestic Product (GDP) ratio,” the source told the Daily Graphic in Accra on Sunday.
Again, individual and institutional investors, fund managers and pension funds are always looking for quality equities to invest in on the GSE. The ADB shares come in handy to improve liquidity of the Ghana Stock Exchange.
The GSE Composite Index gained 0.32 points at the close of trading on May 3, 2016 to settle for a year-to-date change of negative 8.34 per cent. Market analysts have blamed the low liquidity on the market for the poor showing. Stocks such as that of ADB would help boost the market.
