by Mustafa A. Jama
Monday, March 22, 2021
After reading the press release announcing the Initial Public Offering “IPO” of Somtel, I wanted to share my thoughts with the Dahabshiil Group, the Somaliland authorities, and members of the public who may be interested in participating in the public offering.
It is commendable that the Dahabshiil Group “The Group” decided to offer the public a partial ownership of Somtel. My preference would have been that The Group issue the shares at the Holding Company level. That way, the public would have participated in the success of the overall Group, not just in Somtel.Additionally, this would have insured alignment of interest between The Group and the investing public.
Since The Group has already made the decision to sell shares in Somtel, here are some questions for The Group:
• Is Somtel profitable?
• What is the valuation of Somtel?
• How was the valuation of Somtel determined?
• Based on the shares sold at the IPO, what percentage of Somtel will be owned by the public?
• Specifically, what will the proceeds of the offering be used for?
• Will Somtel establish an independent, knowledgeable board of directors?
For the government of Somaliland, here are a couple of questions:
• Did The Group submit any offering documents to the government for review?
• The participants of the offering will be unsophisticated, retail investors. Can the government insure that it has safeguards in place to insure that their capital will be deployed prudently?
For the investing public, here is some advice:
• Don’t put all your eggs in one basket. Dip your toes into the IPO, if you must.
• Ask the company to provide you with basic information, including financial statements and governance documents.
Mustafa A. Jama
Managing Director, Morgan Stanley & Company, Retired
Chief Investment Officer, Morgan Stanley Hedge Funds Business, Retired
He can be reached at [email protected]