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05.12.2007 Business & Finance

Exciting times for Ghana’s capital market

By Business &Financial Times

Ghana's capital market is expected to witness a lot of activity as a number of planned issues are being released on the market.

The issues follow on the heels of a successful debut $750 million 10¬-year Eurobond, launched in late September to yield 8.5 percent, which was nearly four times oversubscribed.

On Monday, SIC launched the initial public offering (IPO) of its general business to raise GHc29.35 million through the Ghana Stock Exchange. The proceeds will go to government, in line with the company's divestiture from total government ownership.

The proceeds represent the offer of 97,822,500 shares representing 50 percent of government stake at 3OGp per share. With 10 percent of the issued shares earmarked for employees of SIC, investors can purchase a minimum of 200 shares and in multiples of 100 thereafter.

Analysts have predicted resounding success for SIC shares; firstly because of the readiness of the Ghanaian investor market demonstrating a strong appetite for initial price offers (IPOs) in recent years.

Examples are the Ghana Commercial Bank rights issue in March this year, and the Ghana Oil Ltd. (Goil) shares which was successfully listed on the GSE last month after a 100 percent oversubscription during the IPO.

Secondly, analysts are of the view that SIC's position as the biggest insurer in the country should prove very much appealing to investors.

Golden Star Resources, a gold company operating two assets in the country since 1999, Wassa and Bogoso/Prestea is also outdooring its Ghana public offer today to raise US$10 million to finance its exploration and mineral development activities.

Likely to be the last in terms of major capital market activity for the year, Golden Star's launch will in no wise be able to quench the appetite of investors, as two major launches including a recapitalization to the tune of US$300 million by Ecobank Transnational and; an IPO of SIC's life to float 60 percent of government shares will hit the market in the first quarter of 2008.

The Ghanaian capital market indeed will have some busy day with the lined up issues which is heart warming to the prospects of the market's viability in terms of capitalization, liquidity and volume of trading.

Though not designed to undergo secondary activity, the launch of the much expected Golden Jubilee Savings Bond on Monday to raise the cedi equivalent of US$50 million from Ghanaians at home and abroad is a bold step in government's efforts at diverting focus from donor dependent sources to self sourced development resources.

The retail bond with five-year tenure, to be sold by all financial institutions in the country including post offices and others abroad to serve Ghanaians in the diaspora, will be sold in multiples of GHc10 beginning from next Monday through March 5, 2008.

Individual investors enjoy a fixed annualized yield of 14.67 percent while corporate investors get 14.14 percent, a deliberate design to encourage individual participation.

Launching the bond, the Minister of Finance and Economic Planning, Kwadwo Baah-Wiredu said "as we celebrate our 50 years of independence, we must look ahead to a future where Ghana's quest for a developed nation and high living standard for all is ably financed from self sources but gradual wean from donor reliance. "