MARKET DATA REVIEW: Raising company’s capital by issuing shares

>Privatisation is the process of transferring ownership of a business, enterprise, agency, public service, or public property from the public sector (a government) to the private sector.

There are two major encouraging statements that came to our attention recently, these statements came from the government: (i) the possibility of repossession of previously privatised state owned entities that were sold to some investors; and (ii) state owned entities, agencies and parastatals are now required to refocus on becoming more efficient and raise their financial needs from the local financial market.

>At the heart of investment, particularly investment in listed shares or any other such investable asset classes is the simple question: is the investment rational? The answer to this question might not be as crystal clear or self-evident in some cases.

>Let’s start the New Year, 2015 by going back to the basics: What does owning shares mean? What is a share? Who can issue shares, Who can invest in shares etc etc.

>If an investor had invested similar amount of money across 14 domestic listed companies on the Dar es Salaam Stock Exchange (DSE), the annualized capital gain return would have been 4.5 per cent. As the table below indicates – share valuation for some companies have grown up above 30 per cent while a few companies have lost – these are the normal workings of the market.

Since the enactment of the Capital Markets and Securities (CMS) Act, Cap. 79 of 1994 and the establishment of the Capital Markets and Securities Authority (CMSA) in 1996, there has been several developments in the Capital markets in Tanzania.

>Back in 2010 two pieces of legislation (Mining Act of 2010 and the Electronic and Postal Communication Act of 2010) were passed by our Parliament and got signed by the president with all the optimism that these laws entailed to fulfill, including some of the dream of local citizens, especially the aspect of the requirement that companies with Special Mining Licences and those operating in the telecommunication sector will be required to offer shares to the public and subsequently list on...

>Over the past few months, we have informed and developed arguments as to why and how private enterprises and the public sector can access funding from the public through an organised local capital markets for their growth, development and welfare.

If one takes a good look into our economy, it is relatively easy to notice that there are five main sources from which our finances for investment activities are ultimately derived from.