Monday, March 7, 2016

2 Reasons Why IPOs Do Not Fail In Ghana

How many times have you heard that IPOs failed in Ghana? Most of the times, IPOs are successful although there were clear sign that they suffered a lot to get to the Ghana Stock Exchange.  Even from the onset of IPOs in Ghana, you can see that patronage wasn’t the best. From Accra Brewery Ltd(ABL) back in 1990 through to SPPC in 1992 which offered 8 million shares but only 4.2 million shares were subscribed.  Mechanical Lloyd also suffered the same pressure to get listed on the exchange. You can get more on the History of IPOs in Ghana here.

Now 2 Reasons and why IPOs in Ghana do not fail;

1. Begging Of Securities And Exchange Commission (Sec) To Extend The Deadline.
Well, as we all know, the first place for companies to look at when their IPOs are about to Fail (i.e. not meeting the minimum subscription level before deadline of IPO) is the SEC. The current ADB IPO is a perfect example. It was initially supposed to end on Friday, February 26, 2016 but as a result of the extension by SEC, the offer period would now end on 24th March 2016. There were other extensions to allow for more patronage. Now let’s move to the next point which is;

2. Begging Of Institutional Investors Like SSNIT To Buy The Shares.
Most IPOs in Ghana have been saved by SSNIT – the number one institutional investor, that just buys and buys and buys. SSNIT owns significant stake in almost all IPOs that were launched on Ghana Stock Exchange.
Sometimes I wonder if there is any company listed on the exchange that SSNIT doesn’t have a stake in. Whether good or bad, SSNIT buys. With this, how could IPOs fail in Ghana. May be few failed, but one of the recent ones is Comet Properties and I guess they were not able to succeed with negotiations with SSNIT to buy.
Let's see how ADB's IPO goes. 'More vim' ADB

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