The listing of investment holding company FMB Capital Holdings (FMBCH) on the Malawi Stock Exchange (MSE) is expected to enhance capital gains, analysts have said.
On Monday, FMBCH became the 14th counter listed on MSE following a corporate restructuring initiative which would result in the formation of a holding company registered in Mauritius.
The development means FMBCH is now the ultimate holding company of the FMB Group. First Merchant Bank (FMB) will be delisted on the local bourse following the listing of FMBCH.
During the official listing on Monday, FMBCH share price stood at K45.01 and recorded a trading volume of 20 325. The firm recorded a market capitalisation of K102 634.54 billion and has since issued 2 280 460 702 shares.
Speaking in an interview on the sidelines of the listing in Blantyre, FMBCH director Hitesh Anadkat said the firm will take the legal registry to Mauritius while the business and shareholding remains the same, making it a good move for capital raising.
“We did this because people are more comfortable to buy shares from a Moroccan entity than directly from a Malawi entity for now because we don’t have full capital market liberalisation while in a place like Mauritius, you can take money in and out of Mauritius without going to the Reserve Bank, for example. That is why people like to buy shares in a company with no capital control.
“We all know that capital requirements in banks is going up, so if there is a capital requirement and there is no enough capital in Malawi to buy shares, our chances of raising the money are much higher because we are in Mauritius,” he said.
“We listed at K2.50, today, the share trades at K45. In US dollar terms, our share price has gone from two cents to 6.2 cents and with bonus shares; the value of the initial shares is now 6.5 cents,” said Anadkat, adding the company will be working on delisting FMB from the local bourse upon regulatory approvals.
In his remarks, MSE chief executive officer John Kamanga said since the start of restructuring, there has been a capital gain of 142 percent with share prices going up from K18.62 to K45.01.
He said that the primary listing of FMBCH at MSE and secondary listing at Mauritius Stock Exchange provides opportunities in terms of diversity as it will be in a position to raise foreign capital in other foreign exchanges and portfolio inflows in the sense that dividends will be locked in dollar terms.
FMBCH transaction adviser and African Alliance chief executive officer, Armstrong Kamphoni, said the restructuring gives FMBCH a better platform to raise money in Mauritius as most international capital tends to turn to Mauritius because of its exchange control rules.
FMBCH was incorporated in Mauritius on 17 March 2016 and was registered as a foreign company in Malawi on June 30 2017.