Malawi’s own FDH Bank offloaded a 20% ownership stake in an initial public offering which closed on the 17th July 2020, in anticipation of the listing of the company on the Malawi Stock Exchange (MSE) on the 3rd August 2020.
FDH Bank is a subsidiary of parent company FDH Financial Holdings Limited, of which Dr Thomson Mpinganjira is the founder. Upon the announcement of plans to list FDH Bank on the stock exchange, Dr Thomson Mpinganjira urged local investors in Malawi to take advantage of the opportunity to secure a partial share in ownership of the bank, keeping as much as possible within the country.
Prior to closure of the IPO, five independent investment firms analyzed the potential prospects of the bank and shared their findings with potential investors. All were agreed that as a long-term investment, FDH Bank shows a lot of promise.
The dividend policy is generous, with up to 80% of post-tax profits offered. At the original share price of the IPO, which was MK10 per share, analysts from Nico Asset Managers Limited suggested there would be steady dividend yields for investors.
The return on assets and return on equity for FDH Bank were significantly higher over the previous two years than those of comparable listed banks and local averages within the industry. Continental Asset Management stated that FDH Bank was well positioned for the mitigation of risk and a viable long-term investment.
John Kamanga, CEO of the MSE, noted that one of the key objectives of the stock exchange in Malawi has always been the distribution of wealth to all citizens. The FDH Bank listing has enabled multiple smaller retail investors to gain part ownership of a bank as well as providing many advantages to the company.
The IPO was deemed a success as share prices increased by 50% within the first day of trading. Before 11am the following morning, more than 900,000 shares had been traded at a price of MK15 per share.