(For other news from Reuters Africa Summit, click here)
* Two small banks, unit of Australian firm eye IPOs
* Tanzania finalising codes to push miner, telco listings
* Bourse wants state sell offs to deepen capital market
By Edmund Blair and Fumbuka Ng'wanakilala
DAR ES SALAM, April 11 Tanzania's stock exchange
is pressing the government to sell shares in more state firms to
help galvanise bigger private businesses to tap the capital
Regulations that will push mobile telephone firms and mining
companies to list on the main bourse were at an "advanced
stage", Moremi Marwa, chief executive officer of the
Dar es Salaam Stock Exchange, said in Tanzania's commercial
capital as part of the Reuters Africa Investment Summit.
He also said there were moves that could allow foreign
investors to buy more than 60 percent of listed firms, raising
the current limit that he said was the lowest in east Africa.
Like many other Africa bourses, Tanzania's exchange wants to
encourage more firms to list or use the exchange to raise funds
via corporate bonds, a potentially cheaper route than more
commonly used banks that charge 18 to 30 percent for loans.
The government could help by listing state firms to create a
more liquid market for private issuers, many of whom are still
reluctant to use a bourse with just 18 listed firms, of which
six are also listed in another country and only 12 are Tanzanian
"What we have been trying to say over the last few months is
to try to educate policy makers because we think the government
can still do much to motivate capital market usage," Marwa said
in the 14th-floor offices of one of city's new towers.
The exchange is reviewing three requests from companies to
join its Enterprise Growth Market for smaller firms, which
launched last year with the initial public offering (IPO) of
Maendeleo Bank that raised 4.8 billion Tanzanian shillings
Marwa said at least two of those could receive approval and
be listed before the end of June.
He said applications had come from two community banks,
which serve rural areas, to raise between 2.75 billion and 5
billion shillings, and the Tanzanian subsidiary of Australian
explorer Swala Energy Ltd, which wanted to raise 3.2
billion to 4 billion shillings.
Energy firms working in Tanzania, which have made huge gas
finds, could be required to list local subsidiaries under a new
law for the industry which has yet to be implemented.
Marwa said Swala was moving on its own initiative. "They
want to supplement their capital that is coming from their
parent company," he said.
The real prize for the exchange, he added, was to secure
more listings on the main bourse. He said he hoped state sell-
offs could help achieve a target of two major IPOs this year,
adding that the exchange had told the government at least 10
state firms that largely met listing requirements.
"We have tried to build the case and communicate it to the
government to see the beauty of using the exchange," said Marwa,
who took up his post in May, noting just seven of the more than
350 firms privatised since the mid-1990s were sold via an IPO.
He said state-led IPOs would encourage more private firms to
follow suit by creating more liquidity on a bourse that now has
a market capitalisation of about 17.5 trillion shillings but
only 6.2 trillion shillings - about 12 percent of gross domestic
product - if cross-listed firms were excluded.
Marwa said another step to encourage more listings would be
to implement laws passed in 2010 that required local listings of
mining firms working under licence and telecoms operators, of
which there are now about six including Vodacom run by Britain's
Vodafone and Airtel run by India's Bharti.
However, the laws have not been implemented because related
regulations were not in place.
The exchange was also seeking to encourage companies to
raise funds through corporate bonds on a market now
overwhelmingly dominated by government bonds. There are now just
four corporate bonds worth less than 40 billion shillings.
Marwa said one challenge was to convince family owned firms
to open up and use the capital market.
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($1 = 1632.0000 Tanzanian Shillings)
(Editing by Drazen Jorgic and Erica Billingham)