[Tanzania] Vodacom to Issue Sh500 Billion Shares
Vodacom Tanzania Limited is to issue shares worth up to Sh500 billion in its planned initial public offer (IPO), The Citizen has reliably learnt.
The amount - the highest in the history of IPOs in Tanzania - will help to stimulate trading activities at the Dar es Salaam Stock Exchange (DSE) as the government seeks to build an inclusive economic growth.
Currently, the net asset value (NAV) for Vodacom Tanzania is estimated to be around Sh750 billion.
However, stock market experts are of the view that since Vodacom is a well established company, its actual value would be more than what is prescribed in the company's Balance Sheet.
This means that its actual market value will be calculated basing on the rule of Premium to NAV, thanks to its excellent management, branding initiatives, investment strategies and its bullish profitability outlook.
The Premium to NAV is a pricing situation that occurs when the stock value of a closed-end mutual fund is trading at a premium to the NAV of its components. The premium arises from the optimistic sentiment of investors toward the fund, which may be due to excellent management and investment strategies.
Basically, the international rule is that the Premium to NAV for such well branded companies would range between twice or thrice the company's balance sheet, suggesting that Vodacom's actual market value will range between Sh1.5 trillion and Sh2.25 trillion.