MTN Uganda IPO doubles the Uganda Securities Exchange

CAPITAL-RAISING/ IPO NEWS – The Uganda Securities Exchange has more than doubled in size after the listing of telecommunications firm MTN Uganda on 6 December. This follows an initial public offering (IPO) that fell short of its target, but attracted 21,394 individuals and corporate investors, including 20,894 Ugandans. In total the parent company MTN Group raised UGX 535.3 billion ($150m), in Uganda’s biggest IPO.

Parent company South African-based MTN Group Ltd was aiming to sell 20% of the ownership of the Ugandan firm by selling shares at UGX200 each. In the event only 60% of the targeted shares were bought, according to the press release from the Uganda Securities Exchange. MTN Group its 96% stake to 83%.

The market capitalization of domestic shares is up from UGX3.8 trillion ($1.1bn) to UGX 8.2 trn. The number of accounts at the USE Securities Central Depository (USE SCD) grew from approximately 38,000 accounts pre-IPO to 113,421 accounts to date, according to the USE.

Digital platforms for the share offer

The USE and MTN Uganda operated digital platforms to allow the public to open new central depository accounts and apply for MTN shares seamlessly. According the bourse, this innovation is the first of its kind in East Africa. Over 74,000 SCD accounts were opened. SBG Securities Uganda Limited was the Transaction Advisor and Lead Sponsoring Broker for the Uganda IPO.

MTN Uganda CEO Wim Vanhelleputte said the offer increased local Ugandan ownership to about 15% from 4%. He blamed “negativity” during the sale period, according to this report on Bloomberg.

Reuters news agency quotes Stephen Kaboyo, managing director of Uganda-based Alpha Capital Partners: “Important factors seem not to have been well calibrated”. He said these included not gauging market appetite well, market conditions during the IPO, and failing to articulate their value proposition well.

Cross border capital raising

Kenyan regulator Capital Markets Authority had “no objection” to MTN marketing the share offer in Kenya, a good example of cross-border share offer. Marketing in Kenya was spearheaded by SBG Securities and Dyer & Blair. Kenyans had to open an account at the USE’s Securities Central Depository.

All East Africans who applied were awarded 5 bonus shares for every 100 shares they are allocated, while Ugandan investors had a bonus of 10 shares for every 100 shares allocated.

Kenya’s National Social Security Fund (NSSF) bought 39.1 m shares in the Uganda firm, according to this report in Business Daily, making it 6th biggest shareholder. Bloomberg reported that other institutional investors include the Uganda’s National Social Security Fund, Duet Africa Opportunities Master Fund IC, EFG Hermes Oman LLC and local pension funds for the Ugandan central bank and tax authority.

See our ACMN report, written before the listing, for more on MTN Uganda’s business.  MTN Uganda began working in Uganda in 1998. In June 2020, it secured a 12-year renewal of its licence on condition that it lists a portion of its equity on the local bourse. It has 15m subscribers and offers mobile financial services. In October 2021, South African parent firm MTN Group said it would invest over UGX1trn to improve coverage in Uganda.

Keith Kalyegira, CEO of Uganda’s Capital Markets Authority, said at the listing he hopes the listing will help Uganda attract foreign capital, especially from global fund managers. Bloomberg quotes him: “The listing is quite significant as it draws the Uganda market closer to being categorised as a frontier market by the different providers of different categorisation indices and particularly Morgan Stanley Capital International.”


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