Uganda: USE Kicks Off On Light Note

Source from:  The Monitor (Kampala) 8 January 2008 01/08/2008

TRADING of shares at the Uganda Securities Exchange resumed with a few share price gains and low stocks' demand typical of most business at the start a new year. Only Development Finance Company of Uganda (Dfcu) and Bank of Baroda Uganda (BOBU) managed to pull off gains by Shs10 and Shs30 respectively. BOBU opened at Shs2,265 but end the day at Shs2,295 while Dfcu opened at Shs690 and closed at Shs700. The duo accumulated a total of only 7,892 shares in exchange while 1,000 and 1,291,490 were exchanged at the New Vision (NVL) and Stanbic Bank Uganda (SBU) counters. Total turnover closed at 1,299,382 almost doubling 752,000 as at close of the financial year on December 20. British American Tobacco Uganda (BATU), Uganda Clays Limited (UCL), SBU, and NVL maintained their opening prices by close of day, at Shs780, Shs5,375, Shs230, and Shs1,150 respectively. The cross-listed companies' counters remained inactive as the Nairobi Stock Exchange (NSE) remained closed. "Yesterday's trading is typical of the beginning of the year. People were coming to terms with the closure of last year, there were very few people trading shares. It is inductive of what happens at the beginning of the year but things will pick up when business returns to normal," Mr Njoroge Nganga, the General Manager Dyer & Blair said. He added: "The beginning has taken off from where 2007 ended and there are no major surprises. But the main activities that will boost the market this year will be the right issues and some planned Initial Public Offering (IPOs) here and in Kenya." A rights issue on bourse allows a company to raise additional capital from shareholders. Through the process, the issuing company offers existing shareholders the right to purchase additional shares of the company at a given price, which is a discount of the prevailing market price of the shares. The first rights issue on the USE will be carried out by UCL which is seeking to raise a minimum of Shs10.6 billion. The money is meant to cover up to 50 per cent of the Shs19.5 billion capital that has been invested in setting up the tile maker's 2nd factory in Budaka District in Eastern Uganda. Mr Njoroge added that several other rights issues which he was not at liberty to divulge are expected this year on the East African bourse and USE in particular. Before the close of 2007, Mr Robert Kabushenga, the Chief Executive Officer NVL revealed that the media company also plans to carry out a rights issue to raise money for the expansion of the most profitable media company in Uganda. On Kenya's NSE, Diamond Trust Bank is also reported to be considering a rights issue but no timeline has been set yet. The NSE is also prepared to list 25 per cent of its 60 per cent shareholding in Safaricom, Kenya's and East Africa's most profitable company. The listing though, is still embroiled in legal battles with those who say the listing should only be effected after the Privatisation Act passed in 2005 comes into force. The judge on the case had however in December last year ruled that there was no illegality on the part of the government to warrant cancellation of the sale. The judge also said that the application came too late, and failed to include Telkom Kenya in the suit, yet the parastatal owns majority shares in Safaricom. Mr Njoroge expressed optimism that this year's performance of the USE would beat last years tremendous records brought about by the listing of 1 billion Stanbic Bank Uganda shares on the bourse. "We can expect a better year than last year because of rights issue from here and also from the Kenya," he said. Enditem