BSE to self-list after demutualization

New ventures: Moribame
New ventures: Moribame

The Botswana Stock Exchange (BSE) looks to convert to a public company by end of 2018 and thereafter invite private investors to buy shares in the firm before listing itself on the bourse.

Through a process called demutualisation, the BSE will transform from a statutory body collectively owned by stockbrokers and government to a public company.

Self-listing is an international practice that stock exchanges normally adopt in developed markets after they demutualise. In a response to Mmegi Business enquiries, market development manager, Thapelo Moribame said the demutualisation process will separate ownership rights of the BSE from trading rights.

“Self-listing is an accepted practice in a lot of markets and it is a practice that we would like to adopt at the BSE. An opportunity for private investors to own shares in the BSE will become available when the BSE eventually self-lists,” she said. This would mean shares of the demutualised company, would be available for trading on the BSE. The Nairobi Securities Exchange sold 38% of its shares in a $7.1 million Initial Public Offer in August 2014, and it self-listed soon afterwards. South Africa’s JSE Ltd did the same in 2006.

The Uganda Stock Exchange and the Dar es Salaam Stock Exchange in Tanzania are also in the process of demutualisation and self-listing.

The demutualisation is not expected to change operations of the BSE, but will result in transformation of the structure of the exchange and leads to an improved corporate governance structure to boost investor confidence and maximises value creation.

 As part of the demutualisation, the BSE engaged a consultant to conduct a valuation of the bourse. According to Moribame, the process of valuation by the independent consultant has been completed, and the Minister of Finance and Economic Development will make the final decision on the award of shareholding.

She declined to reveal details of the valuation saying the final determination will be done by the Minister of Finance and Economic Development. Post demutualisation, the exchange may assume a new name as the BSE Transition Act of 2015 allows the BSE to assume a name that suits the requirements of the exchange, particularly its vision to become world class.

 The BSE is currently engaging stakeholders to solicit suggestions on possible names the bourse could adopt, post demutualisation.

Through an internal process at the BSE, some names have already been proposed which include, Botswana Stock Exchange Limited (BSE Ltd), Botswana Securities Exchange (BSX), Botswana Securities Exchange Group (BSE) and Botswana Securities Exchange Holdings (BSE).

“The proposed names are informed by research, brand identity, the need to be world class as the vision of the BSE prescribes, and the trends in the local securities market.

“However, in finality and having taken stakeholder views into account, the BSE Main Committee will make the final decision and appropriate recommendation to the Minister,” she said.

The BSE is currently in the first year of its five year strategy in which it, amongst others, aims to grow the ratio of the BSE’s market capitalisation to gross domestic product from 34% to 40% by 2021 as well as increase the number of domestic companies listed from 24 to 30 by 2021. In the 2016 financial year, the BSE realised revenues of P31.7 million and posted a profit of P8.4 million.

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