Cresta's "empowerment" IPO succeeds

Brian Benza
Staff Writer | Monday June 21, 2010 00:00

 

The IPO, which had to be extended for a week after a slower-than-expected uptake of the shares, closed last Monday with more than 3, 400 subscribers taking up a total of 38.2 million shares.

As part of its citizen economic empowerment, BDC was disposing of 62.9 million shares in Cresta with 40.7 million of them (22 percent of equity) being offered on the open market through the IPO at P 1.45 a share, equivalent to a price/earnings multiple of 13, a discount to the BSE's current market average.

A private placement of 18.5m shares (10 percent) was recently concluded with institutions (Bifm 5.2 percent, MVAF 3.5 percent, Stanbic Investments 1.4 percent).

In an interview with Business Monitor, the Managing Director of Stockbrokers Botswana, Geoff Bakwena, welcomed BDC's drive to empower citizens through the offer.

'Although only about two million were not taken up, the BDC has managed to achieve its goal of empowering citizens,' Bakwena said.

In response to a question, Bakwena attributed the low uptake of the public offer to the general economic environment which is characterised by low disposable incomes. He also pointed to the unprecedented large amount of shares (40.7 million) on offer.

Stockbrokers Botswana are the transaction's sponsoring broker.

The under-subscription means that BDC - which was also the underwriter for the offer - will remain with a 27-percent stake in Cresta instead of the initially intended 26 percent.

Cresta will now be listed on June 28 to become the second company to list on the BSE this year following the listing of tourism concern, Wilderness, in April. Diamond junior miner, Firestone, is also expected to have a secondary listing on the BSE soon.

Cresta's listing will leave BDC with a 27-percent shareholding while TA Botswana, the strategic shareholder and contracted managers, will maintain its shareholding of 40 percent.

The new shareholder, Cresta Marakanelo Limited (CML), will be quoted on the Domestic Sector of the BSE's Main Board, taking the total number of counters on the exchange to 33.

The hotel group operates eight hotels with 724 rooms. Average occupancy runs at 67 percent.

In pre-listing statement, the Managing Director of Cresta Marakanelo, Tawanda Makaya, was quoted as saying the listing would enhance the company's profile and position it for growth.

'We have a broad geographic footprint across Botswana and are well established as the nation's leading hotel brand,' he said.

'We have achieved significant expansion over the past 11 years. The listing will further enhance our profile and position us for the next stage in our growth strategy - our emergence as a major regional brand.'