Government offloads 50% stake in SIC

Accra, Dec. 3, GNA - State Insurance Company (SIC) Limited on Monday launched its long awaited Initial Public Offer (IPO) with an unrestricted open cash offer of 97,822,500 ordinary shares of no par value representing 50 percent of Government of Ghana's stake in the company.

Dr Anthony Akoto-Osei, Minister of State at the Ministry of Finance and Economic Planning who launched the offer, announced government's preparedness to offload an additional 10 percent of its stake in the event of an over-subscription.

Of the total shares on offer, 10 percent has been earmarked for the employees of SIC at a price of 30 Ghana Pesewas per share under an Employee Ownership Plan whilst the remaining 90 percent goes to the general public at the same price per share.

The offer, which span December 03 to 21, 2007, is expected to generate 29.35 million Ghana Cedis from the sale of the 97,822,500 shares to Government.

This would increase the market capitalisation to 58.69 million Ghana Cedis.

Dr Akoto-Osei said, "The offer is the largest margin of divestiture that any government has ever done in the history of our nation. "Next year government would continue to offload more shares in selected organisations," the objective of which he said included: reducing government's involvement in the running of financial business, encouraging public participation in the ownership of state owned enterprises and creating a vibrant stock market as a means of financing businesses in the country.

Dr Akoto-Osei said currently Enterprise Insurance Limited is the only insurance company listed on the stock exchange and expressed the hope that with the entrance of SIC, other companies in the industry would be challenged to come on board to raise their capital base. He called on the GSE and Security Exchange Commission to undertake vigorous education campaigns in order for Ghanaians to develop interest on the capital market.

Dr Aakoto-Osei said to make Ghana's dream of becoming the financial hub in the sub region, government would continue to support the GSE to upgrade its infrastructure base.

He said government would introduce a 10-year bond next year to help stimulate secondary trading on the Exchange for all investors. Mr Peter Osei Duah, Managing Director of SIC, said as the largest insurance company commanding about 45 percent of market share, prospects were high especially with the discovery of oil in the country. He said SIC was bracing itself to take advantage of the opportunities in the oil business but noted that there was the need for government to put in modalities that would make the local insurance firms effective partners in the process.

Mr Duah said it was unfortunate that even though drilling of the oil was on-going at Cape Three Point in the Western Region, the crew on-board the rig had made their insurance arrangements outside the country.

He said the one million-dollar minimum capital requirement for insurance by the National Insurance Commission ought to be revised upward since it was too low especially considering what pertains in other sub-regional countries.

Nigeria for instance has a minimum requirement of about 40 to 45 million dollars.

Each applicant is required to subscribe a minimum number of 200 shares amounting to 60 Ghana Cedis and thereafter in multiples of 100 shares.