Vodacom IPO: Why good things ought not to be rushed

Those who have examined the IPO bid in detail confirm that the share sale price was rather high, when one looks at the current share price from the prices company founders or erstwhile shareholders paid, as they are not set on the same parameters. That is accounting, of what price the firm could accept.

It would hence appear that owing to the high price at offer for its shares, blue chip or at least close to that renown, there hasn’t been a rapid take up, at least not to the extent the company and the regulators might have expected. 

For it has to be recalled that placing the company’s shares on DSE wasn’t a Vodacom (T) initiative in the first place as they were ready to remain a foreign investment with local roots, a widening clientele, but not necessarily ‘fishing for capital’ at the local level. But pressure for share localization was rising, so they crafted the share sale scheme.

What is unclear is whether business trends have changed for the worse since the IPO was launched before the Budget session of Parliament, which can’t be said from the outside.

 At the same time, there was a period share trading at DSE was abysmally low and then tended to recover, which might be so for acknowledged ‘blue chip’ stocks and not necessarily to high profile newcomer. Vodacom (T) shares are likely to be more highly priced at DSE or one among the more highly priced, on account of this being a well connected firm, with excellent prospects.

This effort at extending the IPO issue not just once but for the second time is an illustration of what could have been said even by a layman, that the matter was in a way rushed, that there was greater pressure to see major telecommunications firms list at DSE than there was perceptible demand for new listings. 

The result is a clearly slow take up of the first listing, and despite that it can’t be said to be a failure, it is true that at times IPO issues register failures, when the amount of money raised is not consonant with expectations. At times it is below a third of expectations.

The logic or inherent use of registration of shares is not as perceived at times, that many local people should own shares, but rather that a company needs to boost its capital by selling shares. 

There is something exaggerated about how important it is for shares to be owned locally, as that comes at a price, and this is why the shares aren’t quite moving, for they are too highly priced. 

The issue isn’t to seek to mechanically bring down the share price as it wouldn’t work, if new and older shareholders don’t see eye to eye – a move that would nearly amount to nationalizing the shares and is wholly out of the question. So there is no substitute for listening to experts on share sale feasibility, timing and obviously pricing, at least for other giant local telecom firms.