As is the case in emerging and frontier markets the world over, for the Ghanaian capital markets to play a key role in the domestic economy, new listings of companies on the Ghana Stock Exchange (GSE) are needed. This is no easy proposition in economies where companies are frequently privately held, with family owners and investors tending to adopt sit-and-hold strategies, thus limiting valuation growth. In 2016, despite adverse market conditions, two financial institutions carried out initial public offerings (IPOs). While demand was weaker than in previous years, the GSE retains its ability to attract new firms and, with strong government support for the development of capital markets and improving macroeconomic conditions, a new generation of IPOs could be on the horizon.


In December 2016 Ghana’s state-owned Agricultural Development Bank (ADB) began trading on the GSE, although not without a number of setbacks. In March 2016, the original deadline for the IPO, the ADB’s two owners – the Bank of Ghana and the Ministry of Finance and Economic Planning – rejected the transaction after the prospective bid of GHS2 ($0.48) per share fell some way short of the GHS2.65 ($0.63) they had sought. In November of that year the ADB tried again, returning to the market with the goal of raising GHS380m ($91m). In the end, 69m shares were sold at the GHS2.65 ($0.63) asking price, representing 85% of the shares on offer and raising GHS326m ($78m). The second bank to list in 2016 was Access Bank Ghana, a subsidiary of Nigeria’s Access Bank Group.

However, weak demand and limited domestic investor interest – a function of the broader macroeconomic environment – blunted the impact of both IPOs. Having initially hoped to raise GHS104m ($24.9m), Access Bank secured less than GHS30m ($7.2m) after a two-week extension to the November 2016 issuing period to raise the GHS21m ($5m) minimum required for listing. By September 2017 Access Bank’s share price had fallen from its listing price of GHS4 ($1) to GHS3.40 ($0.81). ADB performed better, rising to GHS3.83 (0.92) by January 2017 and remaining steady through the first three quarters of the year.

Market participants viewed weak demand for the bank stocks as an indication of wider negative market sentiment. “As one of the biggest banks in Ghana, we should have seen similar excitement among investors for the ADB IPO as we saw for the listing of Ghana Commercial Bank,” Victor Obeng, director of investment and research for Frontline Capital Partners, a local investment banking and asset management firm, told OBG. “But both the ADB and Access Bank IPOs came at a time of low investor confidence. The stock market had closed the last three years with negative figures, the cedi was depreciating, and local banks were heavily affected by the energy crisis and the high rate of non-performing loans,” he added.

Since its listing, ADB has also addressed some of its corporate challenges. “Due to its ownership, ADB has been quite politicised in the past,” Bubune Sorkpor, COO of Argon Holdings, a local investment group, told OBG. “Going public has helped the firm recruit new leadership and lessen ties to the government, which is likely to increase investor interest.”

Next In Line

Given the strong economic headwinds, the listing of two new stocks means 2016 can be considered a relatively successful year for the GSE. Furthermore, an improvement in market conditions in early 2017 signals promise for the coming years.

Potential listings come from three main areas: first, mobile operator MTN is obliged to open up to local investment as a condition of its 4G licence, although it remains unclear whether it will list on the GSE or sell stock over the counter. Second, the positive effect of listing on the ADB’s corporate governance could encourage the government to put other state-owned enterprises up for IPOs. A third possible route could be through initiatives to encourage the listing of small and medium-sized firms on the Ghana Alternative Market.