Investing

Dr Thomson Mpinganjira Announces IPO of FDH Bank on the Malawi Stock Exchange

Dr Thomson Mpinganjira, founder of FDH Bank, announced in 2019 that the bank would be ready for an initial public offering by the following year. In 2020, FDH Bank was listed on the Malawi Stock Exchange as promised, with a 20% stake in the company being offered to retail and industrial investors

Dr Thomson Mpinganjira and his colleagues urged local investors to take an interest so the bank, which is wholly home-grown in Malawi, could stay under local ownership. The IPO was deemed a success, with share prices increasing by 50% from MK10 to MK15 in a single day following the listing. 1.38 billion shares were issued in total, with 950,000 exchanging hands at the new, higher price within the first day following the IPO.

A contractual deal created when FDH Bank acquired 80% of the Malawi Savings Bank from the Malawi government in 2015 included a clause that required the bank to be floated on the stock exchange. While initially this was planned to take place no later than 2018, complications regarding previous bad loans with the bank were required to be cleaned up before the listing could be made successfully.

The confidence of investors was clearly signified by the strong demand for shares and their rapid increase in value. The bank also benefitted from being able to raise capital through the IPO and allowing existing shareholders to relinquish some of their stake in the bank. 

Analysis from five individual investment firms during the process of the IPO agreed that FDH Bank offered good value for investors in the long-term. One firm commented that steady yields and medium to long term gains could be expected with investment at the initial share price of MK10. 

The dividend policy of FDH Bank, which aims to pay out as much as 80% of after-tax profits, was also lauded by the analysts. The forecast dividend yield for FDH Bank at the time of the analysis would be around 7.63%, which would make it the highest on offer in the entire Malawi Stock Exchange.

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