ADB extends IPO to October 9

The Agricultural Development Bank (ADB) has extended the period of its Initial Public Offer (IPO) to October 9, 2015.

The extension was approved by the Securities and Exchanges Commission (SEC). The offer period for the launch, according to the IPO prospectus, was supposed to end on August 21, 2015 but has been extended because of legal battles that halted the process.

The Industrial and Labour Division of the High Court placed an interim injunction on moves by ADB to float shares on the stock market upon the request of the Union of Industry, Commerce and Finance Workers (UNICOF).

ADB began processes for its IPO at the Ghana Stock Exchange, but the legal team of UNICOF sought the injunction after it filed two separate suits challenging the ADB’s decision to sell 40% shares to foreign investors without parliamentary approval.

However, the Supreme Court struck out an application for an order to declare the moves by the ADB Bank to float shares on the stock market as unconstitutional.

The one-member court, presided over by Mr Justice Gabriel Pwamang, also barred UNICOF from initiating any similar action in the court, and awarded costs totalling GH¢10,000 against it.

The decision followed an application by the counsel for UNICOF, Mr Charles Bawaduah, to withdraw the case.

Counsel for ADB Bank, Mr Tony Lithur had no objection, but implored the court to impose a “heavy cost” on the applicants, saying their conduct was reprehensible and ought to be punished.

He said UNICOF had filed a similar case at the High Court that had been dismissed, and pointed out that the action by the union had caused heavy damage to the bank, as customers had been led to withdraw their savings and others had prematurely ended their relationship with the bank.

A Chief State Attorney representing the Attorney-General’s (A-G) Department, Ms Dorothy Afriyie Ansah also called for a huge cost against the applicants to prevent any further disturbance of the process and asked for GH¢5,000 cost against UNICOF.

But Mr Bawaduah submitted that the court had discretionary power regarding the award of costs and, therefore, implored it to apply discretion, since the case was filed in good faith, but had to be withdrawn in order not to waste the court’s time.

The offer period for the launch, according to the IPO prospectus, will end on August 21, 2015.

If the offer launch is successful, the ‘ADB’ stock will begin trading on the Ghana Stock Exchange on September 16, 2015.

The bank is hoping to raise a total of ?398,454,178 through the IPO. A total of 74,888,369 shares belonging to the Bank of Ghana are to be sold while another set of 75,471,698 new shares from the bank itself will also be sold at a new share price of ?2.65.

According to the bank, of this amount, it will dish out ?191,741 million to the Bank of Ghana for its shares.

And ?60 million of the cash raised will be used by the bank for expansion and refurbishment of its branch network.

About ?49 million would be used for rebranding and staff rationalisation.

The rest of the cash raised will be used for business applications: ?34 million for IT upgrades and ?26 million cedis for other IT solutions.

The rest will go into the bank’s new head office, ?8 million; ATM expansion, ?16 million; and other expenses, ?13,480 million.