Investor interest in gold IPO high, says Adu Boahen

Charles Adu-Boahen, deputy minister of finance, says although the government is yet to list Agyapa Royalties Ltd shares on the Ghana and London Stock Exchanges, local and foreign investors have expressed keen interest in investing in this novel gold royalties-backed business.

He said: “Though Ghana is yet to list Agyapa Royalties Limited on the two exchanges, there has been investor interest from various parts of the world. Investor interest remains high.”

The main subsidiary of the Minerals Income Investment Fund (MIIF) and the holding company, Agyapa Royalties Investment Ltd, will be listed on the London Stock Exchange (LSE) while its subsidiary, ARG Royalties Ltd, will be quoted on the Ghana Stock Exchange (GSE) – both through an initial public offering (IPO).

Agyapa Royalties Ltd is a special-purpose vehicle (SPV) created by the government to maximise the mineral royalties received from mining companies.

Under an investment agreement between the Minerals Income Investment Fund and Agyapa Royalties Ltd, the Fund has assigned its right to receive 75.6% of royalties from a portfolio of 12 producing mines and four development assets through Agyapa. In exchange, Agyapa will issue shares worth US$1 billion to the Fund.

The planned IPO from Agyapa will offer some of the shares held by the Fund to investors in order to raise about US$500 million. Listing is expected to happen in the coming months.

At the end of the IPO the Government of Ghana, through the MIIF, will continue to the majority shareholder in Agyapa Royalties with 51% of shares.

Asset of choice

The MIIF is expected to continue receiving dividends from Agyapa and will continue to receive royalty revenue from other operating mines in Ghana that are not related to Agyapa Royalties.

The funds realised are expected to be reinvested in the mining sector of Ghana as well as other countries in the West African sub-region.

“We will see a huge uptake of investments in the Ghana mining sector based on this IPO,” Adu Boahen said. “This is essentially a marketing cause – you’re selling Ghana to investors, making them aware of the opportunities, and this is how you can get that value: through this IPO.”

At a time when gold is trading at a high of about US$2,000 per ounce, experts have argued that although the precious mineral is not a currency it rivals the dollar as an international reserve asset. Gold is also benefiting from the desire for diversification, given the fall in real interest rates.

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