An economic advisor at the Ministry of Finance and Economic Planning, Dr Sam Mensah, has said that the capital market will experience increased activities in the last quarter of the year because of a series of initial flotation of shares in state-owned companies. Dr Mensah, who described the initial public offer (IPO) of the Ghana Oil Company Limited (GOIL) as an exciting development for the capital market, said a similar exercise by the State Insurance Company Limited (SIC) would add impetus to investment activities towards the end of the year. "With the State Insurance Company Limited (SIC) gearing up for a similar exercise by next month the public can see exciting activities on the investment front in the last quarter of the year," Dr Mensah, who has been providing technical support on the flotation of government shares in some state-owned enterprises told the Daily Graphic after the launch of the GOIL IPO. He said it was a good move by the government to share the national cake in the form of investment opportunities for the public. GOIL, which currently controls 18 percent market share of the downstream oil marketing business as well as a leading 28 percent share holder in the lubricants market, last week announced the offer of 42.7 percent of its shares to the public to raise GH¢17.96 million (¢179.63 billion) to carry out an ambitious reinvigoration, rehabilitation and expansion. The shares will sell at Gp20 (¢2,000) per share and prospective buyers could subscribe a minimum of 300 shares, thus GH¢60 (¢600,000) and thereafter in multiples of 100 shares. The initial public offer (IPO) of the oil marketing company is the first by a State-Owned Enterprise (SOE). In the last five years, the company has been posting some impressive results. Between 2002 and 2006, the company has grown its turnover from GH¢57.13 million (¢571.32 billion) to GH¢190 billion (¢1.9 trillion), gross profit grew from GH¢6.7 million (¢67 billion) to GH¢17.68 million (¢176.8 billion), while profit after tax went up from a loss of GH¢225 million (¢2.25 billion) to GH¢3.48 million (¢34.8 billion) in 2006. During that period, oil marketing companies increased from about 23 to the present day number of 40, with intense competition. The Chief Executive Officer of the State Enterprises Commission (SEC), Mr Frank Ocran, said "the exercise is a vindication for the SEC of what we have been harping on. I hope other SOEs will follow the example of GOIL." The government in its budget about two years ago announced its intention to divest itself of some State-Owned Enterprises (SOEs) to concentrate on its core function of governance and also deepen the Ghana Stock Exchange. Mr Frank Ocran commended the management and board of GOIL for their foresight and the use of the offer to position themselves for a higher level of performance. The acting Executive Director of the Energy Foundation, Mr Andrew Lawson, was happy that the government went past the option of a strategic investor, saying "this means the government has a lot of confidence in the management of the company." The company was incorporated as a private limited liability company in 1960 as AGIP Ghana Company Limited to market petroleum and related products. AGIP SPA and SNAM SPA, both of Italy, owned the company until 1974 when the government acquired the shares. By a special resolution in 1976, the government changed the name to Ghana Oil Company Limited (GOIL). In the event of an over-subscription, more than 12.9 million additional shares would be issued to bring the total shares on offer to 49 percent, in an exercise which is expected to end on Friday, October 5, this year. GOIL is hoping to use its GH¢5 million (¢50 billion) proceeds from the offer to expand, rehabilitate, build new service stations, build strategic reserves as well as venture into new areas such as bitumen and the sale of aviation fuel. Source: Daily Graphic