After PW, TBL there comes Africa Barrick Gold!

   After long period of IPOs scarcity since 2008 through 2010, this year 2011 has shown recovery of IPOs and cross-listing. Nation Media Group(NMG) cross listed early this year, Precision Air(PW) IPO and TBL's Mini IPO. However cross-listing on DSE has remained a window for boosting cross-listed companies image rather than for trading(exchange) and raising capital. There are few transactions on cross listed counters and some have seen no single transaction since being cross-listed.
  After TBL's Mini-IPOs there comes Cross listing of African Barrick Gold(ABG) on Dar es salaam Stock Exchange(DSE) which may become the most valued shares following their price of around Tsh14,000 per share. ABG listed its shares on London stock exchange in the beginning of 2011 and expects to cross-list its shares on DSE. This will be an opportunity for local investors to own Africa Barrick Gold which operates four mines in Tanzania being Bulyanhulu, Buzwagi, North Mara and Tulawaka.

          According to the news on Africa Barrick Gold web, Cross-listing will be on 7th Dec. 2011. However, following the structure of ABG only 25% is listed on London Stock Exchange(LSE) and the rest holding is under Barrick Gold. This means a small portion of listed shares in LSE will be traded on the DSE which may end up in a cross-listing trap like most of the Kenyan Cross-listed companies.

Fundamentals as on 31 Dec 2010 shows that ABG is far expensive compare to other Listed companies on The DSE. With PE of 18  and dividend yield of 0.50% the stock is already very expensive with comparison to the just ended Mini-IPO of TBL. Tanzanians were not  allowed to participate in the earlier London IPO in the month of March 2011 at a price of 575pence  therefore they will be having advantage given that ABG share price is trading at discount price of 485.61 pence as on 25/Nov/2011 compare to March 2011 IPO price of 575pence a piece.

    Price of gold has appreciated enormously since 2000. As per the chart above Gold has been on the upper trend since 2000 to-date, from a price of USD300 an ounce to current price of USD 1,680 per ounce(an ounce is approximately 27.1grams). Following current economic crises most rich investors and nations buys gold bullion and gold stocks to hedge against weakening assets and risky currencies.
    We are looking forward to see what more surprises would gold prices bring to us.  With current higher prices we are probalbly at a brink of downward trend would the Eurozone economic crisis challenges be well mitigated.  

Regards,
Emmanuel Akyoo