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Umeme IPO more than 35 per cent oversubscribed

Actis, the pan-emerging markets private equity firm, has held the IPO of the Ugandan electricity company Umeme.

The share application period for Umeme, which has been an Actis investment since 2005, closed last week more than 35 per cent oversubscribed, with particular demand from East African institutions and Ugandan retail customers. The offering is one of the largest in the Ugandan market.
 
The offer price of 275 Ugandan shillings (USD10.5 cents) values 100 per cent of Umeme at USD165m. The total number of shares on offer was 622.38 million, split between 272.4 million new (primary) stock and 350 million secondary shares. This represents 38 per cent of the company’s capital at listing and gives a deal size of approximately USD66m. Actis retains a 60 per cent stake in Umeme
 
Umeme employees and directors were offered nine per cent of the total offer. Consumers of electricity in Uganda who purchased shares received additional free shares
 
The deal targeted East African retail customers with 20 per cent of the offer, qualified institutional investors in the East African Community with 25 per cent, and international investors with 46 per cent.

Funds raised from the IPO will be used to reduce the company’s interest-bearing debt and enable Umeme to secure better financing options over the next few years, to help finance its capital investment programme.

The IFC participated in the IPO and approximately 6,000 new retail shareholders will receive shares in the offer.
 
Trading on the Uganda Securities Exchange is expected to begin on 30 November, with another listing on the Nairobi Securities Exchange to follow by mid-December.
 
Stanbic Bank was the transaction adviser and lead receiving bank, and African Alliance was the sponsoring broker.
 
Since Actis invested in Umeme in 2005, the company has invested over USD134m in modernising its distribution system. By the end of 2011, Umeme had increased its customer base from 250,000 to about 460,000 customers, reduced energy losses from over 38 per cent to 27 per cent, and increased revenue collections from 75 per cent to over 98 per cent.

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