CSD migrates IPOs onto electronic platform
From January 2017 onwards, companies issuing Initial Public Offers (IPOs) on the Ghana Stock Exchange (GSE) will no longer do that through a manual process but on an electronic platform to be introduced by the Central Securities Depository (Ghana) Limited (CSD).
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The new platform is expected to help reduce the cost of IPOs and eliminate the stress that Lead Brokers and other market participants go through when filing applications for new offers.
It will also inject efficiency into the IPO process, thereby making it easier and faster for companies to float a part of their stakes on the GSE, the Chief Executive Officer of the CSD, Mr Stephen K. Tetteh, said in an interview.
“Currently, when companies want to issue IPOs, they use manual process where they fill a form and the forms are compiled and then sent to the Lead Broker for allotment.”
“This has been associated with challenges and it is very costly too,” Mr Tetteh told the Graphic Business on the sidelines of the listing of part of Ghana Home Loans’ US$100 million bond on the Ghana Fixed Income Market (GFIM).
“If the system takes off, Lead Brokers will no longer have to take applications and do allotments manually. All they will have to do is to collect the applications in the system and once they are done, the system will do the allotment,” the CEO added.
Of the US$100 million bond, which the mortgage provider raised, US$5 million, being the first and second tranches, were listed on the GFIM for trading.
Test-runs
Barring any last minute hitches, Mr Tetteh said the electronic platform should take off by the close of this year after successful test-runs have been completed.
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At a recent display to brokers in the country, the CSD CEO said it was confirmed that the system would help speed up IPOs while ensuring that the cumbersome procedures associated with the issuance of IPOs in the country are eliminated completely.
“For us, the idea is to bring efficiency into the market and we hope that the stakeholders will take advantage of the changes to grow,” he added.
“It would also be linked to all the dealers, including all banks, custodians and registrars.”
“When the platform is completed, investors will hold their shares and treasury bills and bonds in a single account,” he said.
Five-year bond
The first and second tranche of the bond started trading on GFIM on November 17 after an approval from the Securities and Exchange Commission (SEC) to establish a Domestic Medium Term Note Programme for an amount of GH¢380million (US$100milion).
The symbolic tolling of the bell for the listing was led by the Managing Director of the GSE, Mr Kofi Yamoah, some representatives from the GSE and management of GHL.
The Chief Operating Officer of Home Loans, Mr Kojo Addo-Kufuor, said bond proceeds would enable the mortgage company to issue mortgage-backed notes denominated in either US Dollars or Ghana Cedis.
“The SEC approval fundamentally transforms GHL’s funding ability, making it possible for the home loans specialist to raise debt from pension funds, high net-worth individuals and other entities that specifically wish to invest in listed securities,” he said.
He explained that the new channel of funding would, in turn, enable GHL to introduce novel and exciting home loan products to the market.
“This bond listing is not significant because of the size but the new frontiers it intends to open in the introduction of mortgage-backed securities to investors,” he added.