FMBCH makes historic MSE debut

Shares in First Merchant Bank Capital Holdings (FMBCH) began trading on the Malawi Stock Exchange (MSE) yesterday, Monday, 18 September.

Shareholders of First Merchant Bank (FMB) were offered one FMBCH share for each FMB share held. The one-for-one offer was accepted by investors representing more than 97.6% of FMB’s ordinary shares.

In its pre-listing statement, FMBCH directors explained that FMBCH, which was incorporated in Mauritius in March 2016, would be the ultimate holding company of the FMB Group, and that its success would derive largely from the performance of the group’s banking and financial services assets in Malawi and in the other southern African countries where it operates. In June 2017 FMBCH was registered in Malawi as a foreign company.

FMBCH director Hitesh Anadkat thanked FMB investors for their “overwhelming” vote of confidence in the future of FMBCH and the board of directors’ strategy to “position FMBCH in an advanced capital market such as Mauritius”.

Anadkat said registering FMBCH in Mauritius meant that the company would, in future, be better placed to raise capital at competitive rates. “Being positioned in a market such as Mauritius means that our business will have greater access to the capital it will require to grow, to the benefit of investors, employees and communities.”

Anadkat stressed that Malawian shareholders would be among those benefitting the most from the listing. “No firm decision has yet been taken as to when – and where exactly – we will seek a dual listing for FMBCH but the likelihood, at this stage, is that, if this does happen, it will be in Mauritius, where the company is registered,” Anadkat said. “Under a dual-listing scenario, shares would be transferrable between the two exchanges. This would avoid the possible development of a ‘discounted market’ in Malawi, which would disadvantage local shareholders. A foreign listing would also raise our profile and attract new, international investors and customers.”

The FMBCH pre-listing statement confirmed that the group would continue all existing operations in all countries and locations, and that there would be no material changes to its business model. The listing would not have any material effect on employee numbers.

The group said the economic outlook in the various markets in which it operates would remain challenging and that the banking environment was likely to continue to be very competitive with ongoing pressure on margins.

“Despite this challenging operating environment, profitability is projected to grow due to the continuous process of business improvement, which the Group has embarked on.” The group added that growth in profitability in 2018 was expected on the assumption that acquisitions, including that of an effective 52.68% interest in Barclays Bank Zimbabwe (which still awaits some regulatory approvals), will be completed by the end of 2017.

Anadkat also pointed out there is still a window up to Friday 6th October 2017 for investors who have not responded to the exchange offer to do so.