Date: 22/11/2004
Title: Mokeyane: Launch of IPO Reference Manual
SPEECH BY DR EUGENE MOKEYANE, DIRECTOR GENERAL, DEPARTMENT OF PUBLIC ENTERPRISES AT THE LAUNCH OF THE IPO REFERENCE MANUAL
Program Director, Ms Noeleen Maholwana-Sangqu,
Honourable Cabinet Ministers and Minister, Alec Erwin,
Your Excellencies, Ambassadors and High Commissioners,
Honourable Members of the Diplomatic Corps Senior Government Officials,
Chairpersons and CEOs of State Owned Enterprises,
Captains of Industries,
Business Leaders,
Distinguished guests,
Ladies and gentlemen,
Members of the media,
It is truly gratifying to be part of the occasion this morning to witness the launch of a historic document in the corporate life of South Africa, The IPO Reference Manual.
It is indeed an honour that you took time off your extremely busy schedules to be part of this occasion remember two Sundays ago, the Chairman of Shell International, Mr Benny Mokaba calling me to indicate that he would have loved to be part of this occasion but that he will be in the USA on another urgent and critical Company related matter. He was tendering his apology that he might not be back from the USA trip. Those who were unable to fulfil their desires to be among us this morning reflect his sentiment.
We who are fortunate to attend this morning are filled with a very special sense of achievement this morning as we take this opportunity to present to the South African nation the historic IPO Reference Manual. It is a well-known fact that we as South Africa now are players in the knowledge economy. Whilst the practice and temptation is to glibly refer to concepts such as the knowledge economy, very few realise that real economic value lies in producing and protecting such knowledge. The IPO Reference Manual is a vital tool in our management and use of knowledge under globalisation.
The DPE realised that as part of its mandate to enhance shareholder value amongst the State Owned Enterprises, and contribute to economic growth and development, it would have to promote understanding and practice of the execution of IPOs economically, efficiently and effectively. In this regard, the DPE put together a team of researchers, writers that conducted interviews with many of those that had played a role in making the Telkom IPO a reality.
The DPE played an important role in the implementation of the Telkom IPO process, by ensuring that government policy was adhered to, and that the IPO process and its outcome would promote the achievement of government’s socio-economic objectives such as Black Economic Empowerment. A chunk of the shares were set aside for the previously disadvantaged, and the target individuals enthusiastically snapped up these shares. Their direct involvement in this historic IPO bodes well for future IPOs of State Owned Enterprises, and there is no doubt that it will lead to meaningful wealth creation and distribution.
Financial markets are key to our economy and the development of our people. They indeed play a significant role in the transmission mechanism of this economy. We, as South Africans, sit in an envious position in the emerging markets as well as in developed markets because of our liquid financial market and a solid banking system to compliment. This historic IPO has enhanced our position by increasing the total market capitalisation of the JSE and thereby giving the investors more choices on what to put in their portfolios. It has also improved the liquidity of the telecommunications sector on the JSE and therefore moved us up the ladder in the size of our stock exchange. Some of my colleagues will agree that it gave them a chance to share in the success of Vodacom which would not have been should we have not had this IPO.
This IPO has also created awareness about the stock exchanges and the role they play in the lives of the ordinary people. The rural population of Limpopo, Eastern Cape, Northern Cape and KwaZulu-Natal now have interaction with the JSE and NYSE directly through their holdings in Telkom SA. They have also learned the importance of investing. They also now understand what the global village is in a sense that they are now invested in the NYSE.
It was not a walk in the park to achieve all this, as you can imagine. We had to spend more time behind the desk; working against deadlines; we had to spend more time in meetings making hard decisions, more time on conference calls around the globe, we just had to spend more time working. In a process of the scale of the Telkom IPO there are many players, and in my role as overall Project Manager for the IPO I had to ensure that the contributions of the various individuals, teams and organizations were harnessed for the achievement of a single objective; the successful listing of Telkom.
Those involved range from the Cabinet, the economic cluster ministries, the State Owned Enterprise in question, labour, the Financial and Sector regulators – the ICASA, the JSE Securities Exchange, the Financial Services Board, the various professional service providers, such as bankers, analysts, brokers, corporate lawyers, accountants, marketers and other specialist consultants.
Clearly the experiences of these groups that play a more direct role in the process are reflected in the IPO Manual, but attention is also given to two groups that play an indirect but nevertheless important role in the success of the IPO. In the first instance you have the members of the public, and they are the ones that ultimately act on the information they are offered on the IPO through the prospectus, Members of the public allow for IPO process to directly impact ordinary citizens by purchasing the shares when they become available on the bourse. Secondly you have the media, and the media plays an important role because it offers one of the most effective ways of creating awareness of the IPO, spreading relevant knowledge as well as answering any questions that arise. In my view the media is able to augment the advertising messages that are part of the IPO campaign by bringing an element of independence to the mass messages that have to be sent to the public. Future IPO practitioners will have to ensure that they strike an optimum balance between paid for advertising and the media campaigns.
The publication of this manual in many ways reflects the completion of the first part of a journey that commenced with the very first steps to implement the Telkom Initial Public Offering. The success of this IPO on such a scale convinced us that there were valuable lessons that needed to be recorded and made available to a much wider audience for use in future IPOs. The success of the Telkom IPO is there for all to see, and the new manual will help preserve and enhance the many valuable lessons that were learnt in preparing, planning and executing that IPO.
One of most important socio-economic objectives of government is the eradication of poverty and the strengthening of the South African economy. I’m happy to say that through the share allocation for the previously disadvantaged a great blow has been struck against poverty, and many of those who took advantage of this unique opportunity have made a healthy return on their initial investment. Secondly, the resounding success of the Telkom IPO has boosted the overall size of the economy, and this demonstrates the positive role that the IPO process can play in South Africa. Thirdly, and members realised this from the media coverage of the recent Telkom Annual General Meeting, a new breed of shareholder democracy is brewing among state owned enterprise because of the listing of Telkom and the manner in which those previously disadvantaged shareholders conducted themselves in that AGM.
The positive response to the publication of this IPO Manual has vindicated our foresight when our political principals accepted the recommendation to invest in its compilation. We are convinced that the IPO Reference Manual will provide those involved in future IPOs with an invaluable resource of information. We’ve also taken care to reflect any relevant global approach and experience within the Manual, and in this regard the Manual offers a wide ranging understanding of the mechanics to execute a Government led IPO. This of course reflects the importance of placing our own practices within a global marketplace, and this kind of mature approach has been repaid handsomely by the success of the Telkom listing on the New York Stock Exchange.
In my view it is more than a coincidence that in the same year that South Africa celebrates its first decade of democracy, that we are gathered here to launch the IPO Manual. The publication of the IPO Manual shows that as our democracy matures, the economic pillars of our society are equally being strengthened. I have no doubt that other IPOs will be different from the Telkom one, but I am also confident that the knowledge that is now available to future IPO practitioners will increase efficiency, economy, and effectiveness. Needless to say, in South Africa and Africa in general.
I conclusion, let me reiterate what has been said elsewhere: “Success is not measured by what a person accomplishes, but by the opposition the person has encountered and the courage with which that person has maintained the struggle against overwhelming odds. Africa now it is your turn!”
Thank you.
Issued by: Department of Public Enterprises
22 November 2004
Title: Mokeyane: Launch of IPO Reference Manual
SPEECH BY DR EUGENE MOKEYANE, DIRECTOR GENERAL, DEPARTMENT OF PUBLIC ENTERPRISES AT THE LAUNCH OF THE IPO REFERENCE MANUAL
Program Director, Ms Noeleen Maholwana-Sangqu,
Honourable Cabinet Ministers and Minister, Alec Erwin,
Your Excellencies, Ambassadors and High Commissioners,
Honourable Members of the Diplomatic Corps Senior Government Officials,
Chairpersons and CEOs of State Owned Enterprises,
Captains of Industries,
Business Leaders,
Distinguished guests,
Ladies and gentlemen,
Members of the media,
It is truly gratifying to be part of the occasion this morning to witness the launch of a historic document in the corporate life of South Africa, The IPO Reference Manual.
It is indeed an honour that you took time off your extremely busy schedules to be part of this occasion remember two Sundays ago, the Chairman of Shell International, Mr Benny Mokaba calling me to indicate that he would have loved to be part of this occasion but that he will be in the USA on another urgent and critical Company related matter. He was tendering his apology that he might not be back from the USA trip. Those who were unable to fulfil their desires to be among us this morning reflect his sentiment.
We who are fortunate to attend this morning are filled with a very special sense of achievement this morning as we take this opportunity to present to the South African nation the historic IPO Reference Manual. It is a well-known fact that we as South Africa now are players in the knowledge economy. Whilst the practice and temptation is to glibly refer to concepts such as the knowledge economy, very few realise that real economic value lies in producing and protecting such knowledge. The IPO Reference Manual is a vital tool in our management and use of knowledge under globalisation.
The DPE realised that as part of its mandate to enhance shareholder value amongst the State Owned Enterprises, and contribute to economic growth and development, it would have to promote understanding and practice of the execution of IPOs economically, efficiently and effectively. In this regard, the DPE put together a team of researchers, writers that conducted interviews with many of those that had played a role in making the Telkom IPO a reality.
The DPE played an important role in the implementation of the Telkom IPO process, by ensuring that government policy was adhered to, and that the IPO process and its outcome would promote the achievement of government’s socio-economic objectives such as Black Economic Empowerment. A chunk of the shares were set aside for the previously disadvantaged, and the target individuals enthusiastically snapped up these shares. Their direct involvement in this historic IPO bodes well for future IPOs of State Owned Enterprises, and there is no doubt that it will lead to meaningful wealth creation and distribution.
Financial markets are key to our economy and the development of our people. They indeed play a significant role in the transmission mechanism of this economy. We, as South Africans, sit in an envious position in the emerging markets as well as in developed markets because of our liquid financial market and a solid banking system to compliment. This historic IPO has enhanced our position by increasing the total market capitalisation of the JSE and thereby giving the investors more choices on what to put in their portfolios. It has also improved the liquidity of the telecommunications sector on the JSE and therefore moved us up the ladder in the size of our stock exchange. Some of my colleagues will agree that it gave them a chance to share in the success of Vodacom which would not have been should we have not had this IPO.
This IPO has also created awareness about the stock exchanges and the role they play in the lives of the ordinary people. The rural population of Limpopo, Eastern Cape, Northern Cape and KwaZulu-Natal now have interaction with the JSE and NYSE directly through their holdings in Telkom SA. They have also learned the importance of investing. They also now understand what the global village is in a sense that they are now invested in the NYSE.
It was not a walk in the park to achieve all this, as you can imagine. We had to spend more time behind the desk; working against deadlines; we had to spend more time in meetings making hard decisions, more time on conference calls around the globe, we just had to spend more time working. In a process of the scale of the Telkom IPO there are many players, and in my role as overall Project Manager for the IPO I had to ensure that the contributions of the various individuals, teams and organizations were harnessed for the achievement of a single objective; the successful listing of Telkom.
Those involved range from the Cabinet, the economic cluster ministries, the State Owned Enterprise in question, labour, the Financial and Sector regulators – the ICASA, the JSE Securities Exchange, the Financial Services Board, the various professional service providers, such as bankers, analysts, brokers, corporate lawyers, accountants, marketers and other specialist consultants.
Clearly the experiences of these groups that play a more direct role in the process are reflected in the IPO Manual, but attention is also given to two groups that play an indirect but nevertheless important role in the success of the IPO. In the first instance you have the members of the public, and they are the ones that ultimately act on the information they are offered on the IPO through the prospectus, Members of the public allow for IPO process to directly impact ordinary citizens by purchasing the shares when they become available on the bourse. Secondly you have the media, and the media plays an important role because it offers one of the most effective ways of creating awareness of the IPO, spreading relevant knowledge as well as answering any questions that arise. In my view the media is able to augment the advertising messages that are part of the IPO campaign by bringing an element of independence to the mass messages that have to be sent to the public. Future IPO practitioners will have to ensure that they strike an optimum balance between paid for advertising and the media campaigns.
The publication of this manual in many ways reflects the completion of the first part of a journey that commenced with the very first steps to implement the Telkom Initial Public Offering. The success of this IPO on such a scale convinced us that there were valuable lessons that needed to be recorded and made available to a much wider audience for use in future IPOs. The success of the Telkom IPO is there for all to see, and the new manual will help preserve and enhance the many valuable lessons that were learnt in preparing, planning and executing that IPO.
One of most important socio-economic objectives of government is the eradication of poverty and the strengthening of the South African economy. I’m happy to say that through the share allocation for the previously disadvantaged a great blow has been struck against poverty, and many of those who took advantage of this unique opportunity have made a healthy return on their initial investment. Secondly, the resounding success of the Telkom IPO has boosted the overall size of the economy, and this demonstrates the positive role that the IPO process can play in South Africa. Thirdly, and members realised this from the media coverage of the recent Telkom Annual General Meeting, a new breed of shareholder democracy is brewing among state owned enterprise because of the listing of Telkom and the manner in which those previously disadvantaged shareholders conducted themselves in that AGM.
The positive response to the publication of this IPO Manual has vindicated our foresight when our political principals accepted the recommendation to invest in its compilation. We are convinced that the IPO Reference Manual will provide those involved in future IPOs with an invaluable resource of information. We’ve also taken care to reflect any relevant global approach and experience within the Manual, and in this regard the Manual offers a wide ranging understanding of the mechanics to execute a Government led IPO. This of course reflects the importance of placing our own practices within a global marketplace, and this kind of mature approach has been repaid handsomely by the success of the Telkom listing on the New York Stock Exchange.
In my view it is more than a coincidence that in the same year that South Africa celebrates its first decade of democracy, that we are gathered here to launch the IPO Manual. The publication of the IPO Manual shows that as our democracy matures, the economic pillars of our society are equally being strengthened. I have no doubt that other IPOs will be different from the Telkom one, but I am also confident that the knowledge that is now available to future IPO practitioners will increase efficiency, economy, and effectiveness. Needless to say, in South Africa and Africa in general.
I conclusion, let me reiterate what has been said elsewhere: “Success is not measured by what a person accomplishes, but by the opposition the person has encountered and the courage with which that person has maintained the struggle against overwhelming odds. Africa now it is your turn!”
Thank you.
Issued by: Department of Public Enterprises
22 November 2004
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