“Wood” IPO period extended
Economy, Opinion

The ZAFICCO initial public offering period for the purchase of shares has been extended, according to statement released on Stock Exchange News Services (SENS).

The Public is informed of the extension of the offer period for the purchase of shares in ZAFFICO for a period of Eight (8) days”, read a statement issued by, Pangaea Securities Limited, the IPO’s Sponsoring Broker on Monday 20th January 2020.

Following a four year wait for an IPO, the Lusaka Securities and Exchange (LuSE) will now see the offer period close over a week later. “This will see the offer close on 29th January 2020 beyond the previous date communicated, 21st January 2020 in the prospectus issued on 6th December 2019”.

There are no reasons provided as to why the IPO period was extended. Extensions such as this one are not uncommon. “Vodacom Tanzania Plc extended the deadline for its initial public offering (IPO) by three weeks in order to give local investors more time to take part in the share sale”, is an example of an extended IPO period reported by the East African website.

The timing of every IPO is very important. The choice of prioritization of Zambians to take part in the IPO and the absence of an underwriter, according to sources close to the transaction, has an impact on how successful the IPO will be.

Over the course of 2019, Financial Insight tracked the performance of the Zambian Equities Market over a 12-month period and it was noted that there is seasonal behavior when it comes to trading on the stock market.  Q4 of 2019 had the highest turnover of K136.50 million in turnover with 29.80 million shares being traded.

The marketing of the IPO is also another crucial ingredient in ensuring its success. The timing of the IPO is very important. 2019 was a very special year and presented its own dynamics especially in Q3 and Q4. This is why Financial Insight believes that aggressive marketing was important for this particular IPO especially because it was Zambian centric. But aggression alone may not be enough. Sensing the availability of liquidity (especially disposal income) in households is a key barometer. Using the accelerating inflation rate that hit double digits last year (as accurately forecast by the central bank) and rising interest rates with the banks, it not a surprise that disposable income is under threat making the “save or buy shares” decision even more difficult.

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