MTN Uganda’s IPO Fails To Hit Fund Raising Target Despite Public Fun Fair
MTN Uganda has failed to hit its expected fund-raising target after its much-publicized IPO. The IPO, which was highly restricted to East African investors, was a much-hyped affair. The IPO was also heavily discounted in a bid to attract investors. However, according to data released by the company, only 64% of the available shares were purchased.
MTN’s Uganda IPO in Numbers
According to MTN, the goal for the IPO was to raise KES 27.6 billion, or roughly a quarter of a billion dollars. The company also sought to sell up to 4.47 billion shares in the process. The IPO was seen as an active push by the Ugandan government to spur local ownership in companies operating in the country.
But at the time of publishing this post, MTN Uganda had only managed to raise KES 16.94 billion, or around USD 150 Million. This fell almost 50 percent of the target. Kenya’s National Social Security Fund or NSSF was one of the top ten investors. The retirement agency bought up to 39.1 million shares, a 0.18 stake into the business. Kenyan investment bank Dyer and Blair also led retail investors in subscribing for the IPO. The bank is associated with serial investor Jimnah Mbaru.
Incentives for Investors
MTN had also put in place a series of incentives in order to fully attract local buyers. First, in coordination with the Ugandan government, the telecoms company restricted share purchases to residents of East Africa only. In addition to this, MTN had also decided to offer investors free shares.
In fact, for every 100 units of shares bought, investors got an additional five to ten shares as part of the deal. This is a very rare arrangement and it was the clearest signal yet that the Ugandan government wanted the offering to be as successful as possible. But it seems despite all these efforts, things have fallen by the wayside.
MTN’s IPO Significance
When it was first announced, the MTN Uganda IPO was touted as one of the biggest in the East African nation. Authorities in Kampala felt that such a high-value investment opportunity will serve to highlight the Uganda Securities Exchange. This would then bring in more investors in the future.
As of now, the bourse is quite small. It has about 40, 000 investors in total and about 17 listed companies. The underperformance of the IPO is sure going to put a damper in efforts to make the bourse more popular and bigger in the future.
What Next for MTN
It’s not the first time an IPO gets undescribed. It happens even in the most advanced markets in the world. But there is no doubt a lot of work still needs to be done if indeed Uganda will bring more investors into the local securities exchange.
There is also still time for people to buy the MTN stock, especially now that it is heavily discounted. After all, this is a good company and its fundamentals look quite good right now.