Capital Markets Authority, 14 Parliament Avenue, Jubilee Insurance Centre, 8th Floor P.O. Box 24565, Phone: +256-414-342788/791 HIGHLIGHTS +256-312 264950/1 CAPITAL MARKETS QUARTERLY REVIEW Fax: +256-414-342803  Regulatory Issues E-mail: [email protected] APRIL - J U N E 2 0 1 4 ,  Developments in the Website: www.cmauganda.co.ug VOLUME16, NUMBER 2 Market

 Public Education

 Regional and Inter- 1.0 LEGAL AND REGULATORY ISSUES national Co- operation 1.1 Stakeholders Consultative Workshops

 International News CMA held three stakeholders regulations that aim at ensur- Finally, a workshop was  Outlook consultative workshops during ing an efficient and transparent held on 14th August to re- the reporting period. The consul- book building process. ceive input from stakehold-  Capital Markets in tative workshops covered: the ers on 10 council directives The second workshop was held the Press draft EAC directives for securities on securities markets cov- markets; the draft capital mar- on 24th July 2014 with delibera- ering: anti-money launder- kets authority amendment Bill; tions focusing on the draft ing; the investor compensa- and fees and book building regu- CMA Amendment Bill, 2014. tion fund; investor protec- lations. Stakeholder views were taken tion; takeovers and mer- for the Bill that aims at: ad- gers; disaster recovery and The first workshop was held on dressing new developments in business continuity; con- both the domestic and interna- INSIDE THIS 5th June with discussions focus- duct of business; central tional markets; ensuring com- securities depository; cor- ISSUE: ing on the proposed regulatory fees and book building regula- pliance with the International porate governance for Legal and Regulatory 1 tions. The Authority heard from Organization of Securities Com- listed companies; self- Isuse various stakeholders on the pro- missions (IOSCO) Multi-lateral regulatory organizations; Memorandum of Understand- Market Development 2 posed regulatory fees that aim at and securities exchanges. putting CMA on the path to finan- ing; and ensuring compliance The Directives will provide Public Education 2 cial sustainability in future. Addi- with the East African Common the framework for harmo- tionally during the same work- Markets Protocol. nization of securities laws shop, stakeholders shared their across the EAC region. Regional and Interna- 3 views on the draft book building tional cooperation International News 4 2.0 MARKET DEVELOPMENT 2.1 Actis Sales Stake in Limited Outlook 4

Capital Markets in the 4 Private equity firm, Actis, of the secondary offer, the menced in 2005) as part of Press sold its stake in Umeme Lim- stake of Actis in Umeme Lim- the government program ited. The sale was done in ited dropped from 60.08% to of restructuring the energy two tranches with the first 14.30%. sector. The company was tranche raising US $ 83 mil- incorporated in the year lion from institutional inves- Umeme Ltd is a power distribu- 2004 and listed at the tors. The second tranche tion company that distributes Securities Ex- raised US $ 7 million from power from the Uganda Elec- change in November 2012. retail investors, the manage- tricity Distribution Company ment and Directors of Limited (UEDCL) under a 20 Umeme Limited. At the end year concession (that com-

CAPITAL MARKETS QUARTERLY REVIEW P A G E 2

2.2 Symposium for Equity and Debt Issuers

To drive growth as es- The key note address was discussed the presenta- “CMA will be hosting poused in the CMA strate- delivered by Mr. Pradeep tion. gic plan for the financial Paunrana (the C.E.O of similar symposium years 2013/14-2015/16, CMA ARM Cement Ltd). He CMA will be hosting similar hosted a symposium for targeting potential issuers made a presentation that symposium targeting po- potential issuers of debt provided a brief back- tential issuers of debt and of debt and equity in order and equity. The event ground to ARM, advice on equity in order to raise the brought together capital preparing for an IPO, ben- level of awareness on the to raise the level of markets industry practi- efits of a being a listed fund raising opportunities tioners and potential issu- company, obligations and available in the capital awareness on the fund ers of debt and equity to post listing issues. A panel markets industry. This is explore the opportunities raising opportunities of eminent personalities expected to stimulate the available to the public and drawn from the banking issuance of capital markets available in the capital private sectors in industry, manufacturing instruments to raise funds Uganda’s Capital Markets industry, accounting pro- hence stoke up the supply markets industry”. Industry. fession and legal fraternity of securities.

2.3 Corporate Bond Breakfast Round Table Meeting

CMA in partnership with dustries to explore the Efficient Securities Mar- long term fund raising op- maximum interaction dur- kets Institutional Develop- portunities for growth ing the session. Two com- ment (ESMID) that falls available in the corporate panies that participated in under the International bond market as well as to the meeting expressed Finance Corporation (IFC) candidly discuss the chal- strong interest in issuing held a Corporate Bond lenges faced in accessing corporate bonds in the Roundtable Breakfast the corporate bond mar- near future. CMA and IFC/ meeting for potential issu- ket. ESMID are planning to ers of the debt instru- have similar engagements ments at the Serena Hotel A total of six (6) partici- every quarter to highlight on Thursday 31st July 2014. pants attended which was the financing opportuni- The event brought togeth- in line with the format of ties available to the private er players from the con- having a small group for sector in the corporate struction and banking in- bond arena. 3.0 PUBLIC EDUCATION 3.1 Public Education Strategy Shift

CMA in a bid to drive supplement internal indication of the commit- growth through increased efforts. The resource per- ment of CMA to raise investor activity adopted a sons are expected to trav- awareness level among new public education erse the country educat- the public on investment strategy marking a shift in ing the public on how to opportunities available in public sensitization efforts. save and invest in the capi- the capital markets. This is In order to reach a target tal markets. projected to translate into of 10,000 potential inves- increased trading activity tors, CMA recruited 25 The new strategy of using in the capital markets resource persons who will external resources is an hence lead to growth.

CAPITAL MARKETS QUARTERLY REVIEW P A G E 3

3.2 CMA Social Media Platforms

The number of people having interact with members of the public and calibrate messages in an access to CMA through social public discussing issues perti- effective manner to reach the target media has continued to rise. nent to investor protection and audiences. In seeking to sensitize the Currently, CMA has access to market development. public on capital markets, CMA has fully over 2,100 individuals through embraced social media to disseminate tweeter and facebook. Social media platforms are being critical relevant information as well as Through the social media plat- adopted globally to facilitate provide a forum for debate on matters forms, CMA has continued to real time engagement with the relevant to the industry.

4.0 REGIONAL AND INTERNATIONAL CO-OPERATION 4.1 East Africa GCR Summit international and local regulatory Thomson Reuters Accelus, in asso- Thomson Reuters Accelus helps or- changes, the summit provided a ciation with the Capital Markets ganizations understand and comply platform for regulators and the Authority of Kenya on 13th May with the increasing regulations they East African GRC community to 2014 held the inaugural East Africa are subject to. The company offers share knowledge about recent Governance, Risk and Compliance market-leading solutions for enter- changes and trends in governance (GRC) Summit in , Kenya. prise governance, risk and compli- and risks. The CEO of CMA- The summit drew participants ance management, enterprise risk Uganda made a presentation fo- from the public and private sector management, policy management, cusing on “The New Rules, Regu- across the EAC region. audit management, global regulato- lations, Supervisory & Develop- ry intelligence, financial crime, anti- ment Initiatives in the EAC Re- With the continued increase in bribery and corruption, supply chain gion”.

4.2 IOSCO Growth and Emerging Markets (GEM) Committee Annual Meeting and Conference

The Commission education; and long-term financing “The meeting discussed a (FSC) of Mauritius hosted the annual through Capital Markets. CMA was repre- meeting of the International Organiza- sented at the meeting by the C.E.O and the number of issues pertinent to the tion of Securities Commissions Acting Communication and Investor Educa- (IOSCO) Growth and Emerging Mar- tion Manager. growth of emerging markets” kets (GEM) Committee from 23rd to th 25 April 2014. The meeting drew par- IOSCO is the global standard setting body ticipants from 39 jurisdictions in Latin for securities regulation, and groups more . America, North America, Europe, Asia than 95% of the world's securities market and Africa. regulators from more than 115 jurisdictions. The Growth and Emerging Markets Com- The meeting discussed a number of mittee is the largest Committee within issues pertinent to the growth of IOSCO, representing 75% of the IOSCO emerging markets. Key among them membership. The Committee endeavours included: demutualisation and its im- to promote the development and greater pact on stock exchange regulation efficiency of emerging markets securities and supervision; improving financial and futures markets as well as provides access and capacity through investor training programs and technical assistance to its members.

CAPITAL MARKETS QUARTERLY REVIEW P A G E 4

5.0 INTERNATIONAL NEWS

5.1 Kenya Successfully Raises US $ 2 Billion from a Eurobond

On 16th June 2014, Kenya suc- tion by global investors in the maid- deficit; modest foreign exchange re- cessfully issued two tranches en Eurobond, with an oversubscrip- serves; and increased volatility of the of a maiden Eurobond to sup- tion rate of about 340% reflecting Kenya shilling against most major cur- port infrastructural develop- strong confidence in the economy rencies. ment in roads, railway and despite increased threat to national healthcare. The Government of security and signs of heightened Kenya joins a handful of African states Kenya issued a tranche of US $ political tensions. Initial indication that have issued Eurobonds successfully 500 million at a yield of 5.875% was that the bond would be offered in the past 24 months. They include: due in 2019 and a second one at a higher yield of 8.80% in light of: Zambia, , Nigeria and Ghana of US $ 1.5 billion at a yield of insecurity; political tension; weak alongside other countries such as Angola 6.875% due in 2024. economic fundamentals; a large cur- and that have recently issued There was a strong participa- rent account deficit; a large fiscal private placements. 6.0 OUTLOOK

With a change in the public edu- ternal resource persons. Through potential issuers of debt and equity cation strategy, CMA will be roll- this initiative, a total of 10,000 securities are expected to intensify so ing out a comprehensive public investors are expected to be as to encourage the tapping of capital education campaign that will reached. markets for long term capital by the involve the deployment of inter- private sector as well as the public nal resources as well as the ex- Additionally engagements with sector.

7.0 CAPITAL MARKETS IN THE PRESS

ACTIS SELLS AN EXTRA 6.7% IN UMEME By Martin Dorothy Nakaweesi, The , 19th , June 2014

Private Equity firm Actis, successfully transaction, he said that the firm had nificant appetite from both institutional concluded the sale of its 45.7 % hold- been delighted by the strong take-up of African investors and international inves- ing of Ugandan electricity distribution Umeme shares, first by heavyweight tors who are keen to tap into the oppor- company, Umeme Ltd for Ush 259 institutional investors, retail investors tunity presented by the growth prospects billion. The sale of shares totaling and Umeme management and directors. of the energy sector in Uganda. “This was 6.7% of the company and worth He noted that this was not only indica- evident in the strong demand seen across about Ush 33.8 billion to Ugandan tive of a healthy appetite for solid Ugan- all investor classes (including retail and retail investors and Umeme manage- dan companies, but also a sign that management) for the transaction,” Mr ment and directors was the final step Ugandans are embracing capital mar- Mweheire noted. in the transaction. kets as an investment avenue. In May 2014, Actis sold a substantial stake in Umeme Ltd, for $85.5 million. Actis’ had The transaction was led by Stanbic as The lead transaction adviser at Stanbic said that it was selling 45.1 per cent out of Lead Transaction Adviser and book Bank, Mr Patrick Mweheire said that the the 60.08 per cent stake it owned in the runner with Renaissance Capital also accelerated book building for Actis’ sale acting as a Joint Book-runner. of a stake in Umeme was highly success- utility company with plans to hold the In communique issued by a partner at ful and the first of its kind. Mr Mweheire remaining minority stake for at least two Actis (Mr David Grylls) at the end of added that the transaction signaled sig- years.

QUOTE

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful " Warren Buffet (American business magnate, investor and philanthropist)

CAPITAL MARKETS QUARTERLY REVIEW P A G E 5 LIST OF LICENCEES This is a list of persons licensed by the Capital Markets Authority to offer various services related to the capital markets industry in Uganda as at 30th June 2014.

LICENCEE ADDRESS

1. Uganda Securities Exchange (USE) Prism Building, Plot 71/73 Stock Exchange, Securities Central De- Kampala Road (opposite Bi-plous) pository P.O. Box 23552, Kampala, Uganda Tel: 0414 343 297/ 342818 Fax: 0414 340841 E-mail: [email protected] Contact: Mr. Innocent Dankaine Ag. Chief Executive Officer 2. African Alliance U Ltd 6th Floor Workers House, Pilkington Road Kampala Fund Manager, Unit Trust Manager, In- Tel: +256-414-235577 vestment Advisor, Broker/Dealer and Fax: +256-414-235575 member of USE E-mail: [email protected] Contact: Mr. Kenneth Kitariko

3. Pine Bridge Investment Co Ltd 1 Pilkington Road, Workers House, 7th Floor Fund Manager, Investment Advisor P O Box 9831, Kampala, Uganda Tel: +256-414-340707/8 Fax:+256-414-340750 E-mail: [email protected] Contact: Mr. Nicholas Malaki

4. Baroda Capital Markets Ltd Plot 18 Kampala Road Broker/Dealer P.O. Box 7197 Kampala, Uganda Investment Advisor and member of USE Tel: +256-414-233680/3 Fax: +256-414-258263 E-mail: [email protected] Contact: Mr. Avinash Kumar Sahani 5. ICEA Investment Services Ltd Rwenzori Courts, P. O. Box 33953, Kampala Fund Management and Unit Trust Man- Tel: +256-414-347535/+256-414-232337 ager E-mail: [email protected] Contact: Mr. Robert Katabaire 6. Genesis Kenya Investment Man- Regus Kampala, Course View Towers 21 Yusuf Lule agement Limited Road (Old Kitante Road) , Kampala Fund Manager/ Investment Advisor P.O. Box 3502, Kampala, Uganda Tel: 0392 312 314 324/ 342818 E-mail: [email protected] Contact: Mr. Ronald Kasolo 7. Crane Financial Services Ltd Crane Chambers, Plot 38 Kampala Road Broker/Dealer P.O. Box 22572 Kampala, Uganda Investment Advisor and member of USE Tel: +256-414-341414/+256-414-345345 Fax: +256-414-341414 E-mail: [email protected] Contact: Mr. Ajay Kumar 8. Crested Stocks and Securities Ltd 6th Floor Impala House, Plot 13/15 Kimathi Avenue Broker/Dealer P. O. Box 31736, Kampala, Uganda Investment Advisor and member of USE Tel: +256-414-230900 Fax: +256-414-230612 E-mail: [email protected] Contact: Mr. Robert Baldwin

CAPITAL MARKETS QUARTERLY REVIEW P A G E 6

LICENCEE ADDRESS

9. Dero Capital Ltd Ground Floor Course View Towers Plot 21 Yusuf Lule Investment Advisor Road P. O. Box 5970 Kampala, Uganda Tel: +256-712-638644, +256-702-638644, Fax: +256-414-220727 Email: [email protected] Contact: Mr. David Ofungi 10 Dyer and Blair U Ltd Ground Floor Rwenzori House Broker/ Dealer P.O. Box 36620 Kampala, Uganda Investment Advisor and member of USE Tel.+256-414-233050/+256-312-265469 E-mail: [email protected] Contact: Mr. Paul Bwiso 11. Equity Stock Brokers Ltd Plot 6/6A Orient Plaza Broker/Dealer P.O. Box 3972, Kampala, Uganda Investment Advisor and member of USE Tel: +256-414-236012/3/4/5, Fax: +256-414- 348039 E-mail: [email protected] Contact: Ms. Gloria Kangabe 12. Devere and Partners Ltd B4 Adam House, Plot 11, Portal Avenue Investment Advisor P. O. Box 21409 Kampala, Uganda Tel: +256-414-342411/+256-414-340846/+256-782 -807079, Fax: +256-414-342411 Email: [email protected] Contact: Mr. Gavin Cooper 13. Deloitte Uganda limited 3 Floor Rwenzori House, 1 Lumumba Avenue Investment Advisor P.O. Box 10314, Kampala, Uganda Tel: +256-414-343850, +256-752-740300 Email: [email protected]

Contact: Mr. George Opiyo 14. UAP Financial Services Ltd Floor 1 Communications House Broker/Dealer, Fund Manager and Unit P.O. Box 1610 Kampala, Uganda Trust Manager and member of the USE Tel: +256-312-370290 Fax: +256-414-346449 Email: [email protected], [email protected] Contact: Mr. Patrick Ndonye 15. PKF Consulting Ltd Plot 37 Yusuf Lule Road Investment Advisor P. O. Box 24544, Kampala, Uganda Tel: +256-414-341523/5 Fax: +256-414-251370, +256-414-341371 E-mail: [email protected] Contact: Mr. Murtuza Dalal 16. PricewaterhouseCoopers Ltd 10 Floor Communications House Investment Advisor 1 Colville Street, Kampala, Uganda Tel: +256-414-236018, +256-414-233743 Fax: +256-414-239153 E-mail: [email protected] Contact: Mr. Francis Kamulegeya

CAPITAL MARKETS QUARTERLY REVIEW P A G E 7

LICENCEE ADDRESS

17. Stanlib 4th Floor, Crested Towers (Short), 17 Hannington Road Fund Manager/ Investment Advisor and Unit P.O. Box 7131 Kampala, Uganda Trust Manager Tel: +256-312-224322/600 Fax:+256-414-254697 Contact: Ms. Annette Rumanyika 18. DFCU Bank Ltd 13 Kimathi Avenue Trustee, Collective Investment Schemes P.O. Box 70, Kampala, Uganda Impala House Tel: +256-414-231784/+256-414-256891/3, +256-312 -300300, Fax: +256-414-231687/+256-414-344260 E-mail: [email protected] Contact: Mr. Walusimbi Kaweesa 19. SBG Securities Limited (formerly CFC Fi- 4th Floor, Crested Towers (Short), 17 Hannington Road nancial Services Ltd) P. O. Box 7131, Kampala, Uganda Broker/Dealer Tel: +256-414-715460/ +256-312-224600, +256-312- Investment Advisor and member of USE 224985 E-mail: [email protected], Contact: Ms. Consolata Mburu 20. KCB Bank Uganda Limited 7th Floor, Commercial Plaza, Plot 7, Kampala Road Trustee, Collective Investment Schemes P.O.Box 7399, Kampala, Uganda Tel: 0417-118200 Fax: 0414-345751 E-mail: [email protected] Contact: Anthony Kituuka 21. Standard Chartered Bank limited Plot 5, Speke Road, Trustee, Collective Investment Schemes and P.O Box 7111, Kampala, Uganda Investment Advisor Tel; +256-312-294459/ +256-414-340077 Fax: +256-414-231473 Email: [email protected] Contact: Mr. David Kaahwa 22. PCP Uganda Limited Plot 5, Speke Road, Fund Manager/Investment Advisor P.O. Box 7111, Kampala, Uganda Tel: +256-312-294459/+256-414-340077 Fax: +256-414-231473 Email: [email protected] Contact: Mr. David Kaahwa 23. Profin Uganda Limited Plot 10 School Lane Naguru Investment Advisor P.O Box 36697,Kampala, Uganda Tel: +256-414-533261/2, Fax: +256-414-533261 Email: [email protected] Contact: Mr. Gareth Burge 24. Burbidge Capital (U) Limited 7th Floor Course View Tours Investment Advisor & Broker/Dealer Plot 21, Yusuf Lule Road - Nakasero P.O. Box 7519, Kampala Tel: 0312 314 384 Fax: 0414 345751 E-mail: [email protected] Contact: Mr. Joel Ssemukaaya

Disclaimer

While every care has been taken in the preparation of this publication, note that the opinions and material in the CMA Quarterly Review do not necessarily reflect the official views of CMA. No representation, war- ranty or undertaking is given and no responsibility or liability is accepted by CMA as to the accuracy of the information contained herein.

CAPITAL MARKETS QUARTERLY REVIEW