Successful IPO for Actis in Uganda

The IPO of 38% of the shares in Umeme, an electricity company it has had full ownership of since 2005, was more than 35% oversubscribed.

Umeme, a Ugandan electricity distribution company owned by London-based fund manager Actis, has closed a share offering which was more than 35 percent oversubscribed.

The company’s offer price of 275 Ugandan shillings (10.5 cents) per share valued it at $165 million. With the offering comprising 38 percent of the company’s capital, the value of the deal was approximately $66 million. Actis, which had owned 100 percent of Umeme since 2005, has retained a 60 percent stake post-IPO.

The offering was targeted at international investors (46 percent of the total shares offered), qualified institutional investors in the East African Community (25 percent), East African retail customers (20 percent) and Umeme employees and directors (9 percent).

In a statement, Actis said proceeds from the IPO will be used to reduce the company’s interest-bearing debt and enable the firm to secure better financing options over the next few years to help finance its capital investment programme.

Trading of the shares is expected to begin on the Ugandan Securities Exchange on 30 November, with another listing on the Nairobi Securities Exchange to follow by mid-December. Stanbic Bank acted as transaction adviser and lead receiving bank, while fellow pan-African banking group African Alliance was the sponsoring broker.

Since 2005, Umeme has invested more than $134 million to modernise its distribution system. In its 2011 annual report, it recorded a 32 percent growth in earnings before interest, taxation, depreciation and amortisation (EBITDA). Profits before tax grew from 6.4 billion Ugandan shillings in 2010 to 44.6 billion in 2011.

Actis, which has $5 billion in funds under management, has invested almost $1.7 billion in Africa and has 32 investment professionals focused on the continent from offices in Cairo, Johannesburg, Lagos and Nairobi as well as London.

Actis closed its second infrastructure fund on just over $750 million towards the end of 2009.