Cresta share price climbs on listing debut

MBONGENI MGUNI
Staff Writer | Tuesday June 29, 2010 00:00

 

Cresta, the domestic board's 21st counter, listed on the BSE yesterday where 352 416 shares exchanged hands in an invigorated trading session which followed the official listing ceremony.

The listing marks the end of a divestment process by the Botswana Development Corporation (BDC), which offloaded its 62.9 million shareholding in Cresta Marakanelo via a private placement, employee scheme and Initial Public Offer (IPO).

The IPO, with an offer of 40.7 million shares at P1.45, was 94 percent subscribed, paving way for Cresta's listing on the BSE.

At yesterday's listing, Cresta's sponsoring broker for the IPO, Stockbrokers Botswana, expressed optimism that the share price would rise above its current levels.

'We conducted a research for the company and we calculated a fair value of P1.71 for Cresta's share, compared to today's closing price of P1.55,' the CEO of Stockbrokers Botswana, Geoff Bakwena, told Mmegi.

'Our research department looked at the projections going forward and also analysed the potential for expansion.Cresta was majority-owned by BDC, which is restricted to local investments. Now they can establish themselves around the region.

'Also, in Botswana, there are opportunities in areas such as Mahalapye. In addition, through the World Cup, people now know about Botswana, which also adds to the net value of the share.'

BSE CEO, Hiran Mendis, described Cresta's listing as a 'milestone' for the local bourse, particularly in terms of the volume of shares offered.

'In the last few years, it's the largest IPO that we have had and that's quite an achievement,' Mendis said.'Although the IPO was not 100 percent subscribed, it was worth P55.4 million, a record for the BSE.

'At the BSE, we have done our bit to attract listings to the market and our efforts cannot be fully appreciated without IPOs like Cresta becoming a reality. We encourage more companies to list because we need to attract retail investors through IPOs, if this market is to grow.'

For her part, Cresta Marakanelo Chairperson, Maria Nthebolan, said the listing was a milestone in the company's 23-year history in Botswana. She said listing would enable Cresta Marakanelo to consolidate its position in the market while pursuing opportunities further afield.

Cresta Marakanelo, the country's largest hotel chain, has eight hotels and lodges in Botswana, including the flagship Mowana Safari Lodge in Kasane. From a portfolio of 247 rooms, the company now manages 724 spread around the country's urban and tourist destinations. Average occupancy is about 67 percent.