MTN Uganda's shares began trading on the Uganda Securities Exchange (USE) last week, rising 2.5% post-listing despite under-subscription issues. The IPO aimed to raise $1.2 billion but only secured $151 million, with 35% of shares unclaimed.
Regulatory Flexibility and Listing Challenges ¶
The Uganda Securities Exchange (USE) granted MTN Uganda flexibility under Listing Rules 2021, allowing up to three years to meet the 20% float threshold after initial under-subscription. This adjustment prevented the telecom giant from failing to list on the main market.
MTN Uganda's initial public offering (IPO) saw 35% of its 1.575 billion shares remain unsold, with CEO Wim Vanhelleputte attributing the low demand to investor hesitation following a decade of stagnant IPO activity in Uganda.
NSSF's Role in Stabilizing the IPO ¶
The Uganda National Social Security Fund (NSSF) emerged as a key investor, acquiring an 8.84% stake for $100 million. This positioned NSSF as the second-largest shareholder, reducing MTN Mauritius's holding from 96% to 83%.
NSSF's investment in MTN Uganda aligns with its broader strategy of backing cash-rich telecoms. The pension body held $93.2 million in Safaricom shares as of June 30, 2020, with combined holdings in Safaricom and MTN Uganda totaling $194 million.
Digital Innovation and Market Expansion ¶
The IPO utilized a digital m-IPO platform, with 93% of applications submitted online. Over 74,000 new securities accounts were opened through the USE Securities Central Depository, boosting participation from 38,000 to 113,421 accounts.
Despite initial concerns, the listing doubled the local market capitalization to $2.3 billion. The share price rose to $0.06 from an IPO price of $0.05, though only 65% of offered shares were purchased.
Market Impact and Future Outlook ¶
The IPO marked MTN Uganda as the second East African telecom to list on a regional exchange, following Safaricom's 2008 Nairobi Securities Exchange debut. Analysts noted the digital-first approach could set a precedent for future listings in the region.
While the offering fell short of its $250 million capital-raising target, the event is expected to expand Uganda's retail investor base from 40,000 to 200,000 participants.
