Umeme Plans To Cross-List On Nairobi Bourse

Umeme

VENTURES AFRICA – Umeme, whose initial public offering (IPO) on Uganda’s Securities Exchange early last month was 37 oversubscribed, is preparing to cross-list on the Nairobi Securities Exchange, it has emerged.

Uganda’s largest electricity distributor said revenues for the first nine months to September this year shot up 64 percent, attributing this explosion to growing customer base. The company currently has half a million customers.

Managing Director, Charles Chapman, said with the successful rollout of prepayment metering underway as well as the new ‘TouchPay’ (mobile bill payment) platform, the company is registering significant improvements in customer service which will continue to be a key focus for the business.

“During the nine month period the company… expanded prepayment metering and grew the customer base to 494.000, registered gains in the fight against power theft with energy losses down to 26 percent from 27 percent at the end of 2011 and recorded revenue growth… with a collection rate of 94 percent despite the large tariff increase at the start of the year due to removal of government subsidies for electricity generation,” Chapman said.

“We also sold 1.435GWh of power with over 10 percent higher sales since the Bujagali Hydropower project came on-stream, invested $25 million in improving the distribution network and generated net cash flows from operating activities of Ushs 50 billion.”

These have boosted Umeme’s Earnings Before Interest Tax, Depreciation and Amortisation (EBITDA) for the nine months period to 30th September 2012 to over UGX 97 billion ($36 million).

The lead transaction advisor for the IPO was Stanbic Bank of Uganda and lead sponsoring broker was African Alliance Uganda. These two units said more than the 622.378.000 shares on offer were applied for by investors in Uganda, East Africa and internationally.

“There were thousands of retail applications in total, which is a good indicator that the IPO was well received by the general public in the three-week offer period. The Ugandan retail segment, institutional investors from Uganda and the rest of East Africa and Foreign Institutions applied for shares worth more than the Ushs171 billion on offer,” said Patrick Mweheire, Stanbic Head of Corporate and Investment Banking.

The IPO opened on Monday 15th October 2012 following approvals by the Capital Markets Authority and Uganda Securities Exchange. It closed on 7th November 2012.

“The strong investor demand is great news for Ugandans as well as for Umeme, because now the company has diversified its ownership including Ugandan and East African shareholders. All the successes going forward are going to be shared directly with our customers who have made the decision to invest in a promising sector. After listing we are likely to have over 5.000 new shareholders,” said Chapman at the time.

Funds raised from the IPO will be used to reduce the company’s interest-bearing debt and enable Umeme to secure additional commercial debt over the next few years, to help finance its expansion strategy.

Umeme is owned by Actis, the emerging markets private equity firm with a total of $5 billion funds under its management.

Since its launch in 2005, the company has invested over $134 million in the distribution system, increased the customer base from 250.000 to about 460.000 customers, reduced energy losses from over 38 percent to 27 percent and increased revenue collections from 75 percent to over 98 percent by December 2011. Umeme directly employs over 1.300 staff.