ADB allocates shares to ‘big’ investors ahead of IPO re-launch

The Board of adb Bank has given its seal of approval for the bank to allocate majority of its shares to institutional investors’ in a move that is expected to guarantee a successful re-launch of its IPO after the initial setback, the B&FT has gathered.

In the Board’s memo sighted by the B&FT, seven institutional investors have been allocated close to 98 per cent of adb shares ahead of the re-launch of the bank’s Initial Public Offer (IPO) in mid-November and this tweak to the share offer is anticipated to help stabilize the bank’s stock once trading begins.

According to the memo signed by the board secretary of adb bank, James K. Agbedor, retail investors will be offered only two percent of the shares, which could be seen as an attempt to deny the entire investor community access to adb shares.

This comes after adb earlier this year failed to complete its earlier IPO process because the bank could not raise the minimum amount of GHC400 million as the bank’s board rejected all offers made at the price of GHC2 per share, instead of GHC2.65 contained in the prospectus.

When successful this time, adb will become the second bank after Access Bank Ghana to trade its shares on the Ghana Stock Exchange this year.

Information available to the B&FT indicates that the board of adb in a meeting on October 25, 2016 on the IPO agreed on a new structure which will see the government cede 20 percent of the company’s shares to an American-based financial firm, Belstar Capital Limited, while the government retains majority stake of some 32.3 percent of the bank's shares.

The board said the new structure is in line with conditions for government’s approval of the listing on the Ghana Stock Exchange.?

As a result, other companies such as SSNIT have been allocated 9.5% of the shares while Starmount Development Company Limited gets 11% and SIC Financial Services 10%. Others are EDC Capital of ECOBANK 6%; and Stanlib, a subsidiary of Stanbic Bank Group, also gets 4%.

According to the Board Secretary, the Bank has apportioned the staff of adb 5% of the shares.

The memo, however, noted: "Government shall have the sole right to appoint the Board Chairman and the Managing Director," adding further that the private equity holders have the right to transfer their shares subject to approval by the government of Ghana which will be the single majority shareholder.

The private equity shareholders are also not allowed to transfer their shares until after five years from the date of allotment plus proposed shareholders are expected to submit their terms sheets for the approval of the board of ADB.

Noticeably, the memo asked that the proposed private equity shareholders put into writing that they are not fronting for any third party but are purchasing the shares of adb for themselves.

This, the B&FT gathered is intended to prevent a hostile takeover of the bank in future; a concern many analysts agree is inevitable.

The transactional advisors remain I.C. Securities Limited, reporting accountants will be Ernst & Young, with receiving bank being Universal Merchant Bank and Lithur Brew & Co retained as legal advisors.

The B&FT has gathered that the share price of ADB per independent valuation by Ernst & Young, is valued as follows GHC2.14 for minimum, while maximum shares will go for GH¢ 2.65.