Malawi Stock Exchange (MSE)- listed Blantyre Hotels Limited (BHL) has increased the number of its shares through a bonus issue and share split, a development that has improved trading liquidity of the shares.
BHL board chairperson Vizenge Kumwenda said yesterday in Blantyre although the company has performed well over the last six years, the share value did not grow in line with the growth in profitability.
“The board of BHL believes that the shares have not gained much value as a result of the smaller float available to the public lending to fewer trades per year.
“The company only has 129 million shares in issue and only nine million shares are available to the public, representing seven percent of the total shares,” he said.
Through the bonus issue and share split—an offer of free additional shares to existing shareholders and division of existing shares into multiple shares to boost the liquidity of the shares—BHL, which owns Protea Ryalls Hotel in Blantyre anticipates affordability and accessibility of shares.
In the bonus issue and share split, the company has used its retained earnings to issue the bonus shares to existing shareholders by allocating three shares to shareholders for every 10 shares in existence.
This has been followed up with a share spilt, resulting in the splitting of every one ordinary share held in the company into five ordinary shares.
Prior to the bonus issue, there were 129.1 million shares in issue and after the transaction, there are now 839.7 million shares in issue.
MSE chief executive officer John Kamanga said the development anchors one of the key pillars for the stock market development.
“What BHL has done is to fulfil one of the pillars of the stock market which is to have issuers in terms of volume as well as diversity. Other than this, we look at demand in terms of accessibility of the market to the investors.
“The shares of BHL have been stagnant for some time. However, with the demsyfication of the share price by issuing extra shares to the public and splitting the same, we are seeing the price being reduced making it more affordable and accessible to the investing public,” he said.
Lead transaction adviser, Nico Asset Managers chief investment officer Emmanuel Chokani, described the development as positive for both the company and shareholders.
He said: “With an increase of shares to 800 million, chances are that shareholders will have an opportunity to sell and buy shares ultimately, increasing the trading volume on the stock market.
“Essentially, what we are expecting is that through this process, the share price should increase to reflect the increased volume and liquidity that is there on the market.” n