adb to float shares in 2015

Agricultural Development Bank (adb) is one of two new listings expected on the Ghana Stock Exchange (GSE) next year, according to Kofi Yamoah, Managing Director of the bourse.

The bank, which is owned by the Ministry of Finance and the Bank of Ghana (BoG), has already started the process of going public after government gave a long-delayed approval to the plan.

The Ministry of Finance holds 52 percent of the bank, with the rest held by the BoG through a trustee. The central bank has often been criticised for owning part of an entity it regulates -- a situation that critics, among them the International Monetary Fund, say creates a conflict of interest and fuels perceptions of favouritism.

It is not yet known how much of the company will be floated on the market -- or whose stake will be offered -- but the ratio will not be less than 40 percent, as per the GSE’s listing rules.

Mr. Yamoah said the exchange is expecting the listing of adb to deepen the market and widen the options for investors.

“Two companies have started the process to list on the stock market, but obviously it requires some steps and those steps are likely to be concluded by the first quarter of 2015. For the main market, we are referring to adb and Africa Atlantic Farms.

“adb has received shareholders’ approval for a public offer, so we are liaising with the Ministry of Finance and Economic Planning and the bank itself toward the next step in listing. It is our hope that by next year, adb will be listed,” he said.

“Short of anything else, it is going to present another opportunity for investors to have an instrument they can also invest in. The key thing for the market is to broaden and deepen it. adb is a profitable bank that will add to the depth and breadth of the market.”

adb is the eighth-largest bank in Ghana by assets and the second-biggest of the three banks -- including GCB and National Investment Bank -- in which the state has a significant stake.

The bank is the ninth-largest by size loans in an industry of 27 banks. In 2013, its loan book expanded by 11 percent to GH¢0.9billion and the bank registered pre-tax earnings of GH¢84million. The equity in the bank stood at GH¢281million in 2013.

adb prides itself on being a bank dedicated to financing agriculture, but concerns have been raised about whether its current structure and operations give the needed thrust to the agricultural sector -- with many commentators asking for the bank to be repositioned to upscale its agriculture business.

Ghana’s agricultural sector employs approximately 42 percent of the working population, according to census data. The sector is often said to be growing below potential, with farmers facing perennial problems such as the unavailability of modern equipment, erratic rainfall, and expensive credit.

Currently, adb is in the initial stage of its follow-up strategic plan for the 2014-2016 period -- which plan is designed to ensure the bank’s sustainable growth and profitability and build on the key successes achieved in the previous strategic plan that was completed in 2012.