Malawi Stock Exchange (MSE) chief executive officer John Kamanga says investor response to Continental Holdings Limited Initial Public Offering (IPO) is positive and has approved the extension of subscription period by one week.
In a statement on Monday, Continental Holdings Limited announced the extension of the IPO, pushing its planned listing on the 16-counter MSE from August 3 to 10.
In an interview on Monday, Kamanga said the bourse received a request for extension, which will accommodate more investors, including salaried employees.
He said: “The extension was done in response to the enquiries the issuer has been receiving from some interested investors as they feel to have been left out as their pay day is after the closure of the offer.
“In response to this, the issuer applied to MSE for an extension to which we approved to be inclusive and give an opportunity to those whose pay day is between 20 and 27 of the month.”
Cedar Capital chief executive officer Armstrong Kamphoni, whose firm is the lead transaction adviser of the IPO, said in an interview that the response this far is positive, adding that the extension follows request from the investing public that wanted more time to participate.
Continental Holdings Limited, which owns CDH Investment Bank, Continental Asset Management, Continental Capital, Continental Properties, Continental Pension Services, CDH Commodities and Continental Asset Management, is offering 753 million shares, representing 25 percent of its equity at K195 per share.
In a separate interview, Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa disputed suggestions from some quarters that the extension could mean weak response, arguing that they have received more inquiries on the IPO.
“In terms of demand, we have experienced a lot of people coming to our office. The extension is, therefore, welcome as it gives more people the opportunity to invest and provides extra time for those who were still reviewing the investment,” he said.
Makwakwa said overall, the IPO offers investors an opportunity to invest in a diversified financial services group, which promises to be a viable long-term investment.
EmpowerX Consult chief executive officer Nelson Mkwende said the extension will give every potential investor a chance to participate in the IPO, adding that it is a normal process.
In its analysis of Continental Holdings Limited IPO, Imara Edwards Securities projects the stock to outperform the market over the next 12 months and has encouraged potential investors to buy the stock.
The analysis indicates that at K195 per share, Continental Holdings has a historic price to earnings ratio (PER) of 14.6x, representing a 42.5 percent discount to the current sector PER of 25.4x.
“Relative to its peers, Continental Holdings ratings is undemanding as it trades at significant discounts to the sector average. In our view, the company’s valuations can quickly relate post listings,” reads the analysis.
Following the extension, according to the statement, the publication of offer results is expected on August 3, refunds and dispatch of documents of the tittle will be held on August 6, approval of all securities into the central securities depository will be done on August 7 with listing slated for August 10 to become the 17th counter.
Continental Holdings Limited shareholders are Trans Africa Holdings, with 61 percent, Press Trust with 14.4 percent, an Employee Share Ownership Programme holds 9.98 percent, MIG Limited has 6.17 percent, Nico Asset Managers Limited 6.07 percent, NBM Capital Markets Limited 2.6 percent and Continental Asset Management Nominees Limited 0.74 percent.
After the IPO, the shareholding structure will be as follows TransAfrica Holdings will hold 32.64 percent, the public 25 percent, Press Trust 17.8 percent, Employee Shre Ownership Programme 9.98 percent, Nico Asset Managers Limited 6.07 percent, MIG Limited 5.17 percent, NBM Capital Markets 2.6 percent and Continental Asset Management limited 0.74 percent.
