Hedasse Automotive & Machinery Market S.C availed 2.99 million shares worth three billion Birr for public subscriptions to build a grand mall in Addis Abeba, whose exact location remains undisclosed.
The company has also offered to charge potential subscribers of shares the highest, 17pc, as promoters’ fee, meant to cover administrative and promotional cost during the period of formation. If succeeded, promoters will raise over half a billion Birr in promoters fee.
Most share companies floating initial public offerings (IPO) charge service charges of five percent to 10pc, thus making Hedasse’s the highest fee to date.
Ahmedin Mohammed, one of the 11 promoters and president of the share company, says such high fees is crucial to cover “operational cost of the project.”
From the fees collected from prospective shareholders, 15pc of it will be deducted for VAT, while six percent goes to corporate social responsibility and eight percent to service commission reserved to shareholders who bring others to buy shares, Ahmedin told Fortune.
The company was initially founded two years ago by 30 individuals and currently has 215 shareholders. With par value of 1,000 Br, minimum number of shares up for subscriptions is 600 shares while the highest is at 2,400 shares.
Hedasse started to sell shares on February 5, 2017, but it officially offered IPO on April 19, 2017, at the Sheraton Addis Hotel.
The company aspires to work in three different industries; automotive market, manufacturing and a grand mall, which is hoped to incorporate no less than 5,000 stores, and claimed by promoters to be “the largest mall in Africa.”
“We’ve been doing research, market analysis and the design of Hedasse grand mall for the past two years,” says Ahmedin, who is an importer of spare parts and machineries.
Ahmedin is currently constructing a spare parts manufacturing plant worth 109 million Br in Qaliti, along Debrezeit Road. He is also among those who initiated the idea of importing 1,000 meter taxis.
The new company intends to construct a three-storey grand mall on a 250,000sqm plot, accompanied by two four-star hotels, and four residential apartments. It will also have a parking space with the capacity of about 8,000 vehicles.
Dereje Mekonnen, a general manager of the project, states that different international construction companies have shown interest to take part in the project. He also compares the grand mall with Mall of Africa located in Waterfall city, South Africa, which lies on 550,000sqm and has 2,500 shops.
“We hope to be dubbed ‘the biggest mall in Africa,” Dereje said.