Demand for BFA IPO exceeds 100%. BPI aims to raise €100 million

BPI is close to raising around 100 million euros from the sale of Banco Fomento Angola (BFA) shares, after the initial public offering (IPO), whose subscription period ends this Thursday, attracted demand that exceeded the amount available to investors, according to Angolan bank officials.

In this operation, the Angolan state and BPI are selling almost 30% of BFA’s capital through what is expected to be the largest IPO ever held on the Luanda stock exchange, valuing the bank at approximately €700 million.

Last Monday, quoted by Jornal de Angola, BFA administrator Natacha Barradas said that the share offering had already registered demand of over 100%, with four days still to go before the end of the order submission period.

In this transaction, the shares are being sold at a price between 41,500 kwanzas and 49,500 kwanzas (€38.35 and €45.74 at the current exchange rate). The final price is only expected to be set on Friday, based on the price stated in the acceptance declarations submitted as part of the general offer (i.e. excluding the offer made to employees).

If the dates set out in the prospectus are confirmed, BFA will make its debut on the Luanda stock exchange next Tuesday, 30 September, when the shares will begin trading on the market.

Contacted by ECO, BPI, which in recent years has been pressured by the European Central Bank (ECB) to reduce its exposure to the Angolan market and is now selling a 14.75% stake in BFA, declined to comment.

Major shareholder on the way?

The IPO will pave the way for significant changes in BFA’s shareholder structure, but it remains to be seen how the forces will play out going forward.

The Angolan state (through Unitel) and BPI, which are currently the bank’s only two shareholders, will see their stakes reduced to 36.9% and 33.35%, respectively, if they manage to sell all the shares covered by this IPO, but will remain the largest shareholders.

However, among the hundreds or thousands of new shareholders that BFA is preparing to welcome, some may assume greater relevance within the bank. The prospectus for the operation admits that an investor may purchase shares corresponding to close to 10% of the capital. BFA officials have already reported interest from institutional investors such as insurance companies and pension funds. In the past, the bank has been associated with the interests of private groups such as Silvestre Tumbula’s group and Gemcorp.

Natacha Barradas told journalists that she hopes the IPO will not be concentrated solely on large business groups or institutional investors and that the operation will allow the bank to open up its capital to Angolans. “We expect that several small investors, organised into associations, will bring a different vision to the bank than we are used to. Our aim is to democratise access and diversify the shareholder structure”, she said.