Ghana’s Regulator Orders Investor Refund in Biggest IPO

  • Agricultural Development Bank planning to reopen sale
  • Lender rejected more than 99% of bids in initial round

Ghana’s securities regulator instructed the nation’s biggest agricultural lender to refund investors after it rejected bids in an initial public offering that closed in March.

The Agricultural Development Bank Ltd. refused 435.1 million cedis ($112 million) of the 437.9 million cedis in bids it received, the West Africa nation’s Securities and Exchange Commission said in a statement sent Tuesday by text message. The lender informed the regulator of its intention to reopen the share sale, the SEC said.

It instructed the public offering’s transaction adviser “to ensure that all monies received in respect of the offer are returned to applicants.”

The IPO has been on hold since March as the government and central bank -- which own the lender -- missed two deadlines to sign off on the deal. The four largest participants in the initial sale bought about 72 percent of the shares that were offered as the bank started talks with the Ghana Cocoa Board and the Social Security and National Insurance Trust, the state pension fund and the nation’s biggest investor, to buy shares in the new round of bidding.

“Clearly we’re looking at a case of a failed IPO,” Doris Ahiati, head of research at Accra-based Databank Group Ltd., which bought some of the shares for its clients, said by phone. “I’m going to demand interest on behalf of my clients because my clients would demand accountability,” she said, while declining to comment on the amount. 

Databank’s decision to participate in a second round of bidding would depend on the offer, Ahiati said.

The Ghana Stock Exchange had hoped the sale would boost trading volumes, helping to spark a recovery after the benchmark index fell into a bear market earlier this year. The index dropped 0.3 percent Tuesday, bringing its loss this year to 11 percent.

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