Tunisia: Market Offering |
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In a significant boost to Tunisia's relatively small stock exchange, one of the country's largest private groups, Poulina GroupPoulina Group
, floated 10% of its capital earlier this month and closed subscription on a high note. The Initial Public Offering (IPO) for the 41-year old company, which operates in food processing and other industries, has been long awaited but only recently confirmed by the Tunis Stock Exchange (Bourse des Valeurs Mobiliers de Tunis, or BVMT)Tunis Stock Exchange (Bourse des Valeurs Mobiliers de Tunis, or BVMT)
. The listing was oversubscribed four times and raised nearly $83m through the sale of over 16.67m shares. Over 18,000 investors participated in the sale, with 51% of the new capital reserved for the local market, and the remaining 49% allocated to foreign institutional investors. The entry of PoulinaPoulina
, which posted profits of over $70m in 2007, onto the local market represents the largest capitalisation in the BVMTBVMT's history. Prior to the listing, the company's capital was valued at approximately $925m, compared to the BVMTBVMT's total capitalisation of around $5.3bn in 2007. The PoulinaPoulina
IPO comes hot on the heels of another major introduction to the BVMTBVMT in late March, when ArtesArtes, an automotive distribution group, released 39% of its capital onto the local market. The IPO, which was at the timeTunisia's largest in over a decade, raised approximately $90m through a combination of private and public placements. According to Bahrain-based International Investment Bank, which holds a 13% share in ArtesArtes, the IPO was 10 times oversubscribed. ArtesArtes
serves as the exclusive distributor of Renault, Nissan and Dacia vehicles in Tunisia, and posted a net profit of nearly $20m in 2007. The two latest entries to the BVMTBVMT
represent a sizeable increase to the stock exchange's capitalisation and, perhaps more importantly, provide a crucial testament to the Bourse's viability. Tunisia's equity market is comparatively small, split between a main market, with around 50 listed companies, and a new alternative small-capitalisation market, which is designed to draw small and medium-sized enterprises (SMEs) who are unable to meet the stringent requirements of the main market. Indeed, market capitalisation represents around 10% of Tunisia's Gross Domestic Product (GDP), which is a small figure when compared to levels in Egypt, Jordan or Morocco. The BVMTBVMT
has struggled to attract new firms for a number of reasons. Companies have been reluctant to list on the main market because of the mandatory capital and profit history requirements, while the relatively unrestricted lending policies of many local banks provide an attractive alternative to financing capital increases. However, the IPOs of PoulinaPoulina
and ArtesArtes underline the role the BVMTBVMT can play in financing expansion and growth. Indeed, these IPOs follow a number of sizeable offerings in 2007, including ADWYA, the second-largest pharmaceutical manufacturer in Tunisia, and Tunisie Profiles Aluminium, the country's sole producer of aluminium profile sections. Additionally, the BVMTBVMT
is largely dominated by the financial sector, with 22 listed banks, leasing companies, insurance and investment firms, which in total represent some 63% of the BVMTBVMT's market capitalisation. While Tunisia's financial sector is in robust health, its weighty presence on the Bourse leaves the market exposed to fluctuations, underlining the need for greater diversification - something that ArtesArtes and PoulinaPoulina will help to bring. New privatisation projects will also provide additional stability to the market. While the size of the Tunisian bourse acts as a stumbling block, it has not impeded market activity. The BVMTBVMT
's performance, which includes a large number of retail investors, has remained fairly robust over the past year, with the Tunindex and BVMTBVMT market indices showing 12.1% and 21.1% year-on-year growth respectively in 2007.
© Oxford Business Group 2008
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