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STANBIC UG - IPO |
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COMPANY BACKGROUND
Stanbic Bank Uganda Limited (Stanbic Uganda) is a subsidiary of Stanbic Africa Holdings Limited (Stanbic), which in turn is owned by Standard Bank Group Limited (the Group). The Group is the biggest South African banking institution by market capitalization and is listed on the JSE.
The Group has total assets of about USD131bn and has one of the biggest single network of banking services in Africa.
Stanbic Uganda is registered and incorporated in the Republic of Uganda.
The Group’s operations outside South Africa include banking subsidiaries in Botswana, Democratic Republic of Congo, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. Outside Africa, the Group has in addition to Standard Bank London Limited, banking subsidiaries located in Jersey and the Isle of Man plus representation in Argentina, Brazil, Colombia, Czech Republic, Hong Kong, Iran, New Zealand, Peru, Russia, Singapore, Sweden, Taiwan, United Arab Emirates and United States of America.
REASONS FOR IPO:
- Government of Uganda (GoU’s) commitment to ensure greater participation in the economy by the private sector.
- Ensure that the ordinary Ugandan partake in the upside downside risk of Stanbic Uganda.
COMPANY FACTS & FIGURES
| Capitalization Data | Valuation Statistics |
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Market Cap (UGX) 358.3bn |
Trailing P/E ratio 10.2 |
IMPORTANT INFORMATION FOR FOREIGN INVESTORS
Number of Shares in Issue: 5,118,866,970
Number of Shares for Sale: 1,023,773,394
Allocation Policy
• 51,188,670 shares will be allocated to employees, representing 1% of the company.
• In the event of an oversubscription for the offer shares, there will be preference for
individual Ugandan applicants, and shares will be allocated on that basis;
• The results of the allocation policy will be announced to the regulators and public
within 21 days of the closing date.
Custodial Services
Two major banks, namely Barclays Bank of Uganda Limited and DFCU Bank provide custodial services. ReNaissance Capital provides custodial services to her clients at no cost.
Foreign Currency Risk
There are no foreign currency controls in Uganda. The economy is fully liberalized and there is
free movement of capital. Foreign investors can repatriate their dividends and capital in full.
The shilling volatility is manageable. The shilling has been trading within a narrow range of 1820-1860 this year.
THE STANBIC UGANDA STORY
From Grindlays to Stanbic Uganda
Stanbic’s entry into Uganda was through an acquisition. The giant South African banking institution acquired 51% of Grindlays Bank in 1992 before buying the remaining shareholding from the GoU in 1996. In 2001 Stanbic acquired 80% in UCBL and when the two banks merged through a share swap the GoU acquired 10% of the merged entity.
Prior to acquisition by Stanbic, UCBL was operating 67 branches around the country. The
branches were running on different IT systems and there was no cross-branch functionality.
The use of different IT systems, and in some branches heavy reliance on manual systems exposed the bank to huge operational risks which resulted in poor risk monitoring and losses. Customer service was also very poor as there was no staff training and development programmes in place.
After the acquisition, Stanbic Uganda took a deliberate focus on customer needs. The company networked all branches by its Bankmaster IT system and a deliberate focus on staff training was undertaken. The branches dotted around the country were revamped and refurbished as the bank took on a different strategic model.
Nature of Business
Stanbic Uganda is a registered commercial bank. It is engaged in the business of banking and provides an array of financial services to both corporates and individuals. The main income generating operations are divided into two, namely; Personal and Business banking and Corporate and Investment banking.
SWOT ANALYSIS
| Strengths • Well capitalized bank - allowing the bank to underwrite big value business; • Strong and solid brand - leading to higher client retention as well as attracting new ones; • Branch network leverage - making it possible to provide banking services to civil servants like teachers, soldiers, nurses in other parts of the country as well as providing services to the rural population; • Strong IT system - enabling centralization of decision making and reducing operational risk and fraud; • Strong management - experienced and well trained management. Weakness(es) • “Big brother” attitude may lead to loss of clients. |
Opportunities • Oil sector - possible huge volumes of business to underwrite in the oil sector. Oil has recently been discovered in Uganda, and financing will be required to extract it as well as banking services for the sector; • Mortgage financing - there is a huge backlog of housing in Uganda. Stanbic has moved into provision of mortgage loans to its clients, and this provides huge opportunities; • Declining interest rates - this may increase business, especially lending business. Low interest rates also reduces default risk per client. Threats • Possible increase in competition - there are over 15 commercial banks in Uganda, and improvements in service provision and products from the current competitors may result in some loss of clients to competitors; • Declining interest rates - this may squeeze interest margins. |
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