Ghana’s main stocks index, which is underperforming frontier markets this year, is set for two initial public offerings by the end of 2015 as the bourse seeks to stem a decline in trading volumes.
Agricultural Development Bank Ltd., a state-owned lender, and Africa Atlantic Holdings Ltd., a corn grower in Ghana’s Eastern region, are preparing to list their shares, Ghana Stock Exchange Managing Director Kofi Yamoah said in an interview in the capital, Accra, yesterday. The 35-member GSE Composite Index gained 11 percent in 2014, less than MSCI FM Frontier Markets Index’s 17 percent rally.
Stocks in West Africa’s second-biggest economy are headed for the lowest returns in three years as the country struggles to narrow a budget deficit and the cedi’s 28 percent slide against the dollar this year pushes inflation to a four-year high. Rising prices are enticing local investors to seek shelter in Treasury bills paying the highest yields since December 2009 or other fixed-income investments pegged to shorter-dated government debt.
“What the stock market is experiencing is the difficulties in the macroeconomics front,” Yamoah said. “If Ghana can pull through both in the short- and medium-term, then we expect attention to refocus on the capital market.”
Volume traded on Ghana’s stock market declined to 16.6 million in the five months through May from 20.2 million a year earlier, the exchange said in a report handed to reporters. The value decreased to 27.4 million cedis ($8 million) from 32.3 million cedis, it said. The cedi weakened 2.7 percent to 3.3851 per dollar at 11:57 a.m. in Accra.
Mega African Capital held the first initial public offering on the exchange in almost seven years as the investment bank sold 1.3 million shares at 3 cedis each in April.
The exchange is in talks with Intravenous Infusions Ltd., a manufacturer of pharmaceutical products, and Juaben Oil Mills Ltd., a grower and processor of palm, to list on Ghana Alternative Market, a parallel market targeting smaller companies with financial difficulties to sponsor themselves to list, Yamoah said. A listing support fund set-up by the exchange has also been accessed by Processed Food and Spices Ltd. and Meridian-Marshalls Holdings Ltd. who are processing documents to list on the alternative market, he said.
“The Ghana Stock Exchange is an exciting platform to consider, particularly for agribusiness infrastructure finance in Ghana,” Jon Vandenheuvel, chief executive officer of Africa Atlantic, said yesterday in response to e-mailed questions. “It is something we are exploring.”
Agricultural Development Bank, known by its initials, mooted a listing at least 2 1/2 years ago. Calls made to James Agbedor, secretary to the board of ADB, did not connect yesterday.
“ADB got shareholder approval to list,” Yamoah said. “We expect the next process to start.”