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Largest public offer of shares by Bank Windhoek

Mon, 29 April 2013 18:51
by Online Writer
News Flash

Bank Windhoek Holdings Limited (BWH) has today announced that the application for its primary listing on the Main Board of the Namibian Stock Exchange (NSX) has been approved.

In addition, a prospectus registered by the Registrar of Companies on 19 April 2013 in terms of section 163 (1) of the Companies Act, Act no. 28 of 2004.

This will be the largest public offer of shares by a Namibian company since the establishment of the NSX.
It is anticipated that the prospectus will be released on 16 May 2013 and that BWH will be listed on the NSX by late June 2013.

“The listing will provide an opportunity to existing BWH shareholders to unlock value through the trading of their BWH shares on the NSX. More importantly, other important stakeholders including clients of Bank Windhoek will be able to acquire BWH shares and participate in the ownership of the group. Full details of the public offer will be disclosed in the prospectus”, said Koos Brandt, Chairman of Bank Windhoek Holdings Limited.

Anyone that wishes to participate in the public offer can collect a prospectus with enclosed application form at their nearest Bank Windhoek branch, stockbroker or the NSX as from 16 May 2013.

The prospectus can also be viewed on the Bank Windhoek Holdings website at www.bwholdings.com.na or Bank Windhoek’s website at www.bankwindhoek.com.na from 16 May 2013. Bank Windhoek will have dedicated and trained staff members in each of its full-service branches to assist its clients and the public with the completion of application forms.

The public offer to subscribe for shares will close on 13 June 2013. The public will be duly informed, through various channels of communication, about the listing as the process unfolds.

Below, The Villager Newspaper Investment columnists, Mr. T; discusses IPOs.

IPO Basics:
An Initial Public Offer (IPO) or stock market offering is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time. Through this process, a private company transforms into a public company.

Initial public offerings are used by companies to raise expansion capital, to possibly monetize the investments of early private investors, and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors.

Most companies undertaking an IPO do so with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide a valuable service, which includes help with correctly assessing the value of shares (share price), and establishing a public market for shares (initial sale). Alternative methods such as the Dutch auction have also been explored. China has recently emerged as a major IPO market, with several of the largest IPOs taking place in that country.
A case for Bank Windhoek
Bank Windhoek Holding is majority owned by Capricorn Investment Holding with other notable shareholders being Nam-mic Financial Services Holdings and CIH Group Scheme. As a directive by the Bank of Namibia, the Finance house is going to offer shares to the public (you and me) –affording the public opportunity of becoming the shareholders of the bank. This process means the shareholder base will broaden and will definitely come with some dilution to the current shareholders to the bank.
The purpose of this IPO according to Bank Windhoek is to comply with Bank of Namibia regulation and their desire to empower locals.  I strongly agree with the later but with a bit of reservation on the operation of our capital markets which operates like a closed club. Most Namibians don’t have a clue about these IPO things. However, this column will enlighten what should be done.
For starters, IJG Securities and PSG Konsult will act as lead advisors and co-sponsor to this transaction and if you require buying these shares that where you can register and apply.
In case you decide to participate in this IPO, here are few things to look out for;
No History 
It's hard enough to analyze the stock of an established company. An IPO company is even trickier to analyze since there won't be a lot of historical information. Your main source of data is the red herring, so make sure you examine this document carefully. Look for the usual information, but also pay special attention to the management team and how they plan to use the funds generated from the IPO. 

And what about the underwriters? Successful IPOs are typically supported by bigger brokerages that have the ability to promote a new issue well. Be more wary of smaller investment banks because they may be willing to underwrite any company. 

The Lock-Up Period 
If you look at the charts following many IPOs, you'll notice that after a few months the stock takes a steep downturn. This is often because of the lock-up period. When a company goes public, the underwriters make company officials and employees sign a lock-up agreement. Lock-up agreements are legally binding contracts between the underwriters and insiders of the company, prohibiting them from selling any shares of stock for a specified period of time. The period can range anywhere from three to 24 months. Cross check with NSX but the lock-up specified by the underwriters can last much longer. The problem is, when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price. 


Flipping 
Flipping is reselling a hot IPO stock in the first few days to earn a quick profit. This isn't easy to do, and you'll be strongly discouraged by your brokerage. The reason behind this is that companies want long-term investors who hold their stock, not traders. There are no laws that prevent flipping, but your broker may blacklist you from future offerings - or just smile less when you shake hands. 

Of course, institutional investors flip stocks all the time and make big money. The double standard exists and there is nothing we can do about it because they have the buying power. Because of flipping, it's a good rule not to buy shares of an IPO if you don't get in on the initial offering. Many IPOs that have big gains on the first day will come back to earth as the institutions take their profits. 

Avoid the Hype 
It's important to understand that underwriters are salesmen. The whole underwriting process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as "once in a lifetime" opportunities. Of course, some IPOs soar high and keep soaring. But many end up selling below their offering prices within the year. Don't buy a stock only because it's an IPO - do it because it's a good investment.