Understanding / Your new opportunity
What does a listing entail?
A listing, also known as an Initial Public Offering (IPO), is a process through which a company becomes public by listing its shares on a stock exchange and inviting members of the general public to become shareholders. This is usually done via a prospectus.
What is a prospectus?
A prospectus is a legal document issued by companies that are offering their shares for sale to the general public. A prospectus includes (amongst others) a description of the company’s background, its financial statements and performance for the past 5 years, its corporate governance and its future strategy.
What is a Stock Exchange?
The stock exchange is a virtual market where investors connect to buy and sell shares, most commonly known as stocks or shares, which represent ownership in a public company. In Namibia we have the Namibia Stock Exchange (NSX).
What is a share?
A share is a unit of ownership interest in a company, verified by a share certificate in Namibia. A share entitles the owner to a share of the profits (proportionate to their shareholding) and dividends, if and when declared.
What is a dividend?
A dividend is a sum of money paid, when declared, by a company to its shareholders out of its profits (or reserves). The discretion to declare dividends lies with the Board of Directors of the company.
Shares are designed to provide investors with two types of potential returns, namely income and long-term capital growth. Most shares offer income in the form of dividends, which are typically paid twice a year. Dividends can be seen as a reward for shareholders. Investors may buy shares specifically for dividends.
What is capital growth?
Capital growth, or appreciation, is the increase in the value of the share price of a company over time. A share is a type of investment and is classified as an asset on the balance sheet of the investor.
How to buy and sell shares?
The most common way to buy and sell shares is on the stock exchange using a stockbroker registered with the NSX. You can also apply for shares through a public offer via a prospectus during an IPO. The secondary market involves the buying and selling of shares after the company has been listed.
Why do share prices go up and down?
Share prices change every day due to market forces (i.e. Supply and Demand). If more people want to buy a share (demand) than sell it (supply), then the price moves up. Conversely, if more people want to sell a share than buy it, there is greater supply than demand, and the price will fall. Various factors will have an effect on the share price, including (but not limited to) the growth in the company’s profits, market sentiment and general economic conditions.
What is involved in owning shares and being a shareholder?
- When you buy a company’s shares, you become a shareholder of that company
- As a shareholder, you have the right to attend and vote at general meetings
- As a shareholder, you earn returns when you receive dividends or if you decide to sell your shares when the price of the shares gain in value
- However, a company may choose not to pay out dividends. For example, the company may instead choose to re-invest profits into the business
- A company’s share price will be affected by various factors, including (but not limited to) the growth in the company’s profits and future prospects, market fluctuations and general economic conditions. Share prices can also go down and dividends are never guaranteed
Background information on the SBN Holdings share offer:
- 25.1% of the shares will be on offer during the IPO running from 7 October (opening at 09h00) until 1 November (closing at 12h00)
- Share price is N$8.90 per share
- The minimum number of shares that can be bought is 250 shares and thereafter in multiples of 100 (i.e. 250, 350, 450, 1,050, etc.)
- The application amount is calculated as 250 shares x N$8.90 = N$2,225
What is the minimum number of shares one can buy?
The minimum is 250 shares and thereafter in multiples of 100 (i.e. 350, 450, 550, etc.).
On the day that I buy: do I buy at the price that was quoted on the website and Prospectus? What is the cost per share?
The share price from the day the Prospectus opened (7 October 2019) until the date that the public offer closes (1 November 2019) is locked in at N$8.90.
Once the share is floated on 15 November, market forces will determine the share price.
If applications close at 12h00 and I deliver the documents at 11h55, will my application be accepted? And what is the closing date and time for online applications?
Yes, as long as the payment has been received by 12h00.
Both online and physical applications close at 12h00 on 1 November 2019.
What is the process for applying on behalf of minors/trusts/partnerships, and what documents are required?
The public offer shares may be applied for in the name of a minor but the application must be accompanied with a certified birth certificate in addition to all the other required documents.
The public offer shares may not be applied for in the name of a partnership.
Executors, trustees and individual partners may apply for such public offer shares in their own name or through nominee companies. Documentary evidence of capacity must accompany the public offer application.
Look out for more FAQs to follow.
Should you require any further information, please email Public.Offer@standardbank.com.na.