One of Africa’s fast-growing home-grown financial institution, Malawi Stock Exchange (MSE) listed National Bank of Malawi plc (NBM) share price has jumped by 15.4 percent to K9 427 following the announcement of plans to establish a holding company.
Market data show that the ‘Bank of the Nation’, NBM stock jumped from K8 166.78 to trade at K9 426.38 after the announcement on September 8 by the Malawi Stock Exchange-listed bank to engage services of a consultant on the creation of a holding company.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa told The Nation that the surge in share price is a response to investors’ confidence on the proposed restructuring of the company
He said: “Many investors believe that the restructuring will improve operations, which is often seen as a way to unlock value, enhance efficiency and strengthen long-term growth prospects.
“This optimism is creating demand and pushing the share price up.”
Nico Capital Limited chief executive officer Misheck Esau said the bank’s decision has excited investors, considering that the banking licence has limitations on a number of investments it can undertake.
Esau said: “The banking licence has a number of restrictions which National Bank of Malawi may be facing as a holding company to make other investments.
“One of them is a capital charge [provision for loss] for any investment in a company that is not consolidated in its accounts as a banking corporation.”
Esau said this route can enable diversification of the group from the financial sector into real sector in Malawi and elsewhere in the region.
Minority Shareholders Association of Listed Companies secretary general Frank Harawa said: “The share price surge is linked to the plans to create a holding company and the fact that the bank’s share price will likely undergo share split.
“The price to earnings ratio of NBM suggests the share price is undervalued, which means it is set to grow with the coming of a holding company as it will create demand.”
NBM plans to create a holding company to oversee its diversified portfolio of subsidiaries, a model financial market experts described as the best from a regulatory and governance perspective.
In a request for proposals for creating National Bank Holdings signed by NBM chief executive officer Harold Jiya, the bank is seeking consultancy services to develop the operating model of the new entity.
When asked whether NBM will be delisted and then list the holding company on the 16-counter MSE or that both the holding company and the bank will be listed.
He said they will assess the models as investors would want to also invest in the holding company.
When NBM Holding is registered, it will join holding firms such as MSE-listed Nico Holdings plc, FMB Capital Holdings plc which owns First Capital Bank, FDH Financial Holdings Limited, Continental Holdings Limited and LifeCo Holdings Limited.
“This optimism is creating demand and pushing the share price up.”
Kondwani Makwakwa
Stockbrokers Malawi Limited equity investment analyst
