MTN Uganda IPO falls short of target as investors keep away
MTN staff attend to clients during an MTN EXPO in 2018.
Investors bought only 64 per cent of the shares in a discounted, initial public offering (IPO) by MTN Uganda, a statement from the company showed late Friday.
MTN Uganda was seeking to raise KSh27.6 billion from the sale of 4.47 billion shares as part of a Uganda government backed push meant to spur local ownership of the telecoms industry but managed to collect just KSh16.94 billion (UGX535.9 billion).
Kenya's State owned National Social Security Fund (NSSF) emerged sixth among top ten shareholders after securing 39.1 million shares to get a 0.18 shareholding in the telco.
South Africa’s MTN Group was selling a fifth of its stake to investors in its Ugandan subsidiary at a price of UGX 200 equivalent to KSh6.2 apiece.
Free shares
The IPO was open to Ugandan investors as well as citizens of other East African Community member states, including Kenya. The shares are due to start trading on the Nairobi bourse on December 7.
To boost chances of the offer being successful, which required applications for purchase of at least 1.1 billion shares, MTN was offering prospective investors free shares of between five and 10 units for every 100 units allocated.
This represented an effective discount of five to 10 percent of the purchase price, assuming an investor got their full allocation and the incentive shares.
The incentive shares were rare for an IPO in the regional market and signalled MTN’s determination to ensure the offer was successful.
Local ownership
The IPO had been tipped to be Uganda’s biggest ever and seen as a major boost to its stock market, a small bourse with 40,000 investors trading just 17 stocks.
The Uganda Communications Commission (UCC) in 2019 directed all foreign-owned telcos to reserve at least 20 percent of shares to locals and East Africans by end of 2021 in the deal meant to spur local ownership of the telecoms industry.
The Ugandan government set the listing of telcos on the local bourse as one of its licence renewal conditions to allow local ownership of big companies with few large shareholders.
The listing will make MTN Uganda the second publicly traded telco in EAC after Safaricom IPO on the Nairobi Securities Exchange in 2008.
Kenyan investment bank Dyer and Blair owned by billionaire businessman Jimnah Mbaru was the lead retail broker for the IPO.
