Buyers Reluctant to Snap Up Umeme Shares

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In short
Power utility firm Umeme Limited has placed 13 million share offers worth four billion shillings on the Uganda Securities Exchange but buyers are not eager to snap them as yet.

Power utility firm Umeme Limited has placed 13 million share offers worth four billion shillings on the Uganda Securities Exchange but buyers are not eager to snap them as yet.
 
The shares are trading at 300 shillings, 25 shillings more than the share price offered at Umeme’s initial public offer in late October and early November. The IPO had 622 million shares which were reportedly oversubscribed by 36 percent, according to Umeme.
 
Since Umeme began trading on the stock market on November 30 2012, only about 200 million shillings worth of shares have so far been bought, a negligible performance for a newly traded company that should attract buyers.
 
Information from the USE indicate that on Umeme’s first day of trading, 647,000shares were traded at prices ranging between 270 shillings and 290 shillings raking in a total of 181 million shillings.
 
This means that on top of the 181 million shillings in stock sales on the first day of trading, shares worth 20 million shillings have been traded between Monday and Wednesday this week.
 
Henry Tamale, a broker with Crested Stocks brokerage firm, attributes the sluggish Umeme shares trading to potential buyers wanting to assess how the shares will move, either upwards or downwards.
 
According to Tamale, many buyers fear to rush and buy in because they are unsure whether the share prices will remain steady, rise or fall down. If the share prices fall down drastically, the buyers lose out.
 
Tamale revealed that most of those who have bought the few Umeme shares are institutions that could not buy as much shares as they would have wanted in the initial public offer.
 
Arthur Nsiko from the African Alliance says Umeme’s floating of shares has increased the number of Ugandan companies on the stock market, matching up Ugandan companies and their Kenyan counterparts.
 
There are sixteen companies on the stock market, eight of which are cross-listed from the Nairobi Stock Market.
 
The other local listed companies are Uganda Clays, New Vision Group, National Insurance Corporation, Stanbic Bank, British American Tobacco, Bank of Baroda and DFCU Bank.
 
Meanwhile, Stanbic Bank shares remain the most sought after shares due to its positioning as an international bank with a solid background.
 
Umeme’s entry onto the bourse has increased its market capitalization from 497 billion shillings to 512 billion shillings.

 

About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."