Published: December 10, 2010
New rule to force foreign companies onto stock exchange.
Tullow Oil’s expected listing on the Ghana Stock Exchange next year could herald the start of a string of IPOs in the country from overseas companies.
The authorities are considering a mandatory requirement for all international mining, energy and telecoms companies operating in the country to be listed on the Ghanaian Stock Exchange by 2015. A similar move has already been made in Tanzania.
Ekow Afedzie, deputy managing director of the exchange, told newswire Reuters that he would back such a move. Other industry players also see the benefit. As well as promoting liquidity in a largely illiquid market, the step would keep more of the money made in Ghana within the country, says Elikem Kuenyehia, managing partner of Ghanaian law firm Oxford & Beaumont.
“The feeling is that in a lot of our industries – in mining, in telecoms, in banking – while there have been great returns, all of those returns have gone to foreign companies investing in Ghana,” he tells emeafinance, adding: “At the moment there’s nothing to stop companies being 100% foreign owned and sourcing their products 100% from overseas.”
It will remain to be seen whether these companies, many of which will already be listed on other global exchanges, would happily undergo another IPO in order to remain active in Ghana. Kuenyehia does not foresee a backlash.
“It’s a relatively simply process to list on the Ghana Stock Exchange,” he says. “The costs are not going to be prohibitive.” Many companies will already be active in other African countries where local shareholders are required, he says, although he adds that he expects most to open Ghanian subsidiaries and list those rather than apply for a secondary listing for their entire company.
Tullow Oil was expected to join the exchange during 2010, but the company is understood to have delayed these plans until 2011.