Public Investment Corporation (PIC), the South African government-owned investment firm, now owns 10 per cent of Vodacom Group after buying 40 per cent stake in Vodacom Tanzania allocated for foreign investors in the telco's initial public offering (IPO).
PIC bought all the 224 million shares --and worth about $90 million-- allocated for foreigners after investors failed to take up the offer.
Vodacom floated 560,000,100 ordinary shares trading at Tsh850 ($0.4) each in March. The company was forced to extend the offer to July 28 and allow foreigners to participate after it failed to hit $213.07 million target, a 25 per cent stake in the company.
Last week, Vodacom said the IPO was fully subscribed with more than 41,000 Tanzanian investors buying 60 per cent of the shares and the rest by foreigners.
PIC is said to have taken up the IPO offer as an underwriter.
An underwriter is an investment bank or institution that guarantees to purchase all unsubscribed shares after the IPO closes, at a fee.
The Vodacom share offer was adhering to the government’s law that all telecoms operating in Tanzania have 25 per cent local ownership via IPOs at the local bourse.
The Tanzanian government encouraged locals to buy the shares by giving credit to civil servants, allowing them to buy shares against their $20.8 million in salaries and allowance arrears. Civil servants, however, constitute only five per cent of Tanzania’s population and could not take up all the shares.
Of the 60 per cent shares taken by locals, 94 per cent were bought by institutional investors with only 6 per cent by individual buyers.
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