The Initial Public Offering (IPO) of shares by Botswana Telecommunication Corporation Limited (BTCL) will give every Motswana an opportunity to be a shareholder of the corporation and share in the profits.

| January 21, 2016

Botswana Stock Exchange (BSE) official, Mr Thabelo Nemaorani said this in response to a questionnaire.

He said BTCL would start trading on the local bourse come April 8, and that the corporation's shares were opened to the public on January 11, 2016.

However, Mr Nemaorani observed that for those who already own other stock, this was an opportunity to diversify their portfolios by buying into a company that exists in a new industry to the BSE.

He said the listing of BTCL would increase the market capitalisation and expand the product offering of the BSE more so because this would be the first listing of a telecommunications company on the BSE.

"Certainly, this will enhance the liquidity of the market," he noted.

He said shares wre financial assets that represent part ownership of a company and represent a financial claim to residual profits of a company.

"When one buys shares in a company, they become a shareholder and one of the owners of that particular company," said Mr Nemaorani.

Asked on how shares improve the life of the owner, Mr Nemaorani explained that as a shareholder, one shares in the profits of the company. He said this sharing comes in the form of dividends which were normally paid out twice a year.

"Over and above the timely dividend payout, the value of the shares can appreciate over time hence the shareholder would realise some capital gains when they eventually sell their shares," he said.

Moreover, Mr Nemaorani said shares were relative liquid as they were easy to sell or buy compared to other assets such as property.

Meanwhile, Mr Nemaorani said as at January 15, 2016 there were 32 companies listed on the BSE. He said 22 of these were listed on the domestic board while 10 were on the foreign board.

"The domestic board is made of companies that are domiciled in Botswana and primarily listed on the BSE."

On the other hand, he said the foreign board was for companies that were primarily listed on other stock exchanges and secondarily listed on the BSE.

Mr Nemaorani said out of 22 domestic companies listed on the domestic board of the BSE, six were Botswana franchises of international companies and do not have the freedom to expand into other countries.

"These are First National Bank Botswana, Barclays Bank Botswana, Standard Chartered Bank of Botswana, Sechaba, Engen and G4S.

Of the remaining 16 companies, 12 have regional operations in countries outside of Botswana," he said.

He said almost all of them originated in Botswana, and now use the country as their primary hub for regional operations.

As for the benefits of cross border growth, Mr Nemaorani said it helped the companies gain access to greater markets. Also, he said when companies expand they gain access to a larger pool of human capital, skills and infrastructure.

However, expansions have their downsides, he said. "There are inherent country risks that are peculiar to every economy," he added.

These, according to Mr Nemaorani include exchange rate risk, political and risks emanating from the difference in culture and regulatory environments.

Moreover, a quarterly economic review from econsult states that firms have been able to expand primarily because they operate successful businesses in Botswana. And, as a result, have strong balance sheets with retained profits from the existing Botswana operations, which give the firms the requisite capital base to finance expansion.

Furthermore, it says the business environment in Botswana enables the firms to have access to additional capital from various sources, whether from the banks, the BSE or regional sources.

It further states that "two of the companies have undertaken rights issues on the BSE to raise finance for regional expansion, while one raised capital from a share issue on the JSE.

Another company noted that it was much cheaper to raise a US dollar loan from banks in Botswana than in Zambia."

Source: BOPA

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