Pre and Post Analysis IPO Analysis of TNM Limited – Lessons for Malawi Capital Market

TNM Limited successfully concluded a significant IPO in Malawi in terms of shares offered to the general public. Critical review however reveals that little value was transferred to the general public. The shareholders of the company prior to the IPO instituted mechanisms of amassing substantial benefits from the company by splitting shares of the company so as to secure substantial dividends and capital gains at the expense of prospective investors who would be required to buy very huge number of ordinary shares. This puts off informed investors who look for other attractive investments thereby affecting liquidity in the capital market.There is little investors’ confidence on Malawi Stock Exchange as prospective investors are not interested to participate in an IPO because of low returns received from substantial investments. This is evidenced by absence of an IPO in Malawi since November 2008. The listed companies on the Malawi Stock Exchange should adopt substance over form in complying with the listing rules and provide sufficient information to the current and existing investors. Malawi Stock Exchange should enforce compliance of listing rules to bar insiders from participating in IPOs as underwriters to enforce discipline in the sole capital market in Malawi.Malawi’s Capital Market is still too young. There are very few studies undertaken to critically review its performance. It has not been studied widely to assess its strengths and weaknesses. The Listing Rules of the Malawi Stock Exchange require substantial review to meet the demands of the market in the current contemporary times. Malawi Stock Exchange, the only capital market available in Malawi should enforce disclosure of pertinent information from all the listed companies for investment decisions. Malawi Stock Exchange should evaluate the disclosure requirements which must fall in line with the revised International Financial Reporting Standards.