Newly appointed CEO of the Botswana Stock Exchange, Thapelo Tsheole, discusses locals’ overwhelming interest in the BTCL IPO and sets out what will be his priorities as he takes over. He fields questions from KABELO ADAMSON
The interest shown by the citizens in BTCL IPO has been overwhelming; do you believe that this is could be the turning point in the way locals view shares?
Historically, interest in shares by locals has been very high over the years. Most of the past IPOs that came to the BSE were highly oversubscribed. There are a few special things about an IPO that makes it attractive to retail investors. Firstly, there are no transaction costs involved and the shares are very affordable such as the BTCL shares that are going for P1.00 a share. Secondly, these IPOs are well marketed and a lot of information is put out by the company itself, the Brokers, the Exchange and other stakeholders and this enables investors to confidently make informed decisions on the basis of such available and abundant information. Thirdly, the access points in terms of where investors can access the Prospectus and subscription forms, fill them and drop them off together with payment, are spread all over the country. Lastly, it is a given that everyone who applies during an IPO will be allotted a piece of the pie. These factors play an important role in promoting investor confidence, enabling decision making, promoting accessibility and reach of the IPOs and mobilising investors to participate in the stock market.
As the BSE, how do you intend to take advantage of the interest shown by the citizens in owning shares?
We are involved in this process in many ways as is always the case with any IPO that is coming to the market. The BSE pursues market development initiatives that are aimed at educating the public about what an IPO is, and generally about investing in the stock market. We do this through all the available media platforms. Information flow is very vital to sustain interest and promote literacy about investing on the stock market. Very soon we will be publishing a brochure written in both English and Setswana in very simple terms because we are cognizant of new investors that are entering the market as a result of the BTCL IPO.
In your view, why has the citizens shown so much desire in this BTCL IPO?
BTCL in particular is a very interesting case because the IPO is as a result of Privatisation. And this is the first time in the history of the country that Privatisation of a Public Entity has occurred through an IPO and subsequent listing on a stock exchange. Batswana have been stakeholders in this company since its inception and its descent in the country was a landmark development in respect of the telecommunications sector. Having noted the investment that Government has made in the company over the years, the individual support over the years, and the way it has presented itself as a sustainable enterprise it is only right those who believe in the future of this enterprise take pride in it and participate in this economic empowerment initiative.
And I must emphasize the fact that this landmark transaction by Government of Botswana is indeed Citizen Economic Empowerment. This IPO is exclusive to Batswana and this is solely to their benefit as stakeholders in the economy. The other thing that we believe props up the retail investor enthusiasm in this IPO is that Batswana have long been waiting for it since Government announced its intention to privatise BTCL. To the Exchange it’s a viable addition as at the current moment we don’t have any listed company from the Telecommunications sector. This will bring the much needed diversity to the bourse and to investor portfolios.
As BSE, what initiatives have you undertaken before to educate the general public about buying of shares?
Our initiatives are nonstop as it is our mandate and strategy to promote investor awareness about the stock market and promote financial literacy. We are always present in publications, in radios, newspapers and television disseminating information on this subject and demystifying a lot of issues about investing and even addressing other unique but related concerns especially in this economic climate where agricultural output has drastically diminished due to drought and Batswana are starting to now consider investing in shares as a way to diversify their traditional investment pursuits such as arable and pastoral farming.
What does BSE intends to do this that will further make the local market more attractive?
The BSE has several initiatives in place and we can share some. Besides marketing the Exchange and promoting awareness we have initiatives that aim to promote efficiency and safety of transacting in shares listed on the BSE. For example, we are busy trying to get as many investors as possible to open CSD accounts, and also to dematerialise their current holding of shares. This IPO has been useful to us because as an initial step one has to open a CSD account right away to participate in it. We are also looking to introduce internet-based trading, which will begin in the next few years. This initiative will enhance the BSE’s reach as these days a larger percentage of the population has access to internet, through cell phones or computers. On the supply side, we will continue to launch other investment products outside of equities, such as Exchange Traded Funds, partake in initiatives to develop the debt market and also make the regulatory environment competitive with respect to compliance and safe guarding of investor assets. Most companies locally are showing little interest in listing IPO, what could be behind this lack of interest in listing.
Awareness of this window of opportunity is very important in order to generate interest.
What is BSE doing to address this?
On the 10th of March 2016, the BSE will be hosting the Inaugural BSE Listings Conference at GICC. This is the first conference of its kind to ever happen whose intention is to attract private companies to list on the stock exchange. The overall aim of the Inaugural BSE Listings Conference is to open up the BSE to the business community and bring together the BSE, private companies with the potential to list on the BSE, listed companies and experts in capital markets to discuss the value added to a private company by a listing on a stock exchange, the listing process and requirements. The conference also intends to avail a platform for listed companies to share lessons on how they created value through listing and how they leveraged on their listing to expand their services and products offerings to markets outside Botswana. The BSE has mainly invited small, medium, and large enterprises that are not listed to get to hear experiences of listed companies and how they used their listing to grow their companies.
As the new BSE CEO, kindly share with us your roadmap and all you wish to achieve during your tenure.
One of the single biggest developments for the BSE and domestic capital markets is the Demutualisation of the BSE. Both the Securities Act and the BSE Transition Act were approved by Parliament in 2014, and the latter subsequently commenced on 1 December 2015. In essence, Demutualisation of the BSE has commenced. Once this transition is finalised, the BSE will become a for-profit entity with commercial objectives. It will become imperative for the Exchange to develop new means of generating and diversifying revenue and competing for global funds with global Exchanges. In the interim, we are leveraging on our current infrastructure being the ATS and CSD systems to promote efficiencies, develop downstream product like the internet-based trading I talked of and introduce new services in respect of the CSDB. We are making our regulatory environment much more vibrant by consistently improving our rules and promoting regulatory oversight and surveillance. Several initiatives are in place to promote product diversity, diversify the revenue base and enhance financial self-sufficiency. In short, as the new CEO there is a lot I am looking to achieve this year and in the coming years that will transform the domestic capital markets, promote competitiveness of the BSE amongst global exchanges, and make the BSE an efficient and effective regional, continental and global player.