Shares in Africa’s second biggest telecom company had a disappointing start in conditional trading on the London Stock Exchange today. The initial public offer had been priced at the bottom of the 80p-100p range, and in exchange trading it quickly plummeted 16% from 80p and by 4pm the shares had retreated to around 67p.
Today the trading was conditional, only for holders allocated shares in the global IPO. The shares are set to start trading unconditionally on the LSE from 3 July and Airtel Africa will be dual-listed on the Nigerian Stock Exchange from 5 July.
The offer of 744.0m shares had raised approximately £595 million ($750m), including 39.2m shares offered to Nigerian institutional and high net worth investors for a total Nigerian offer of some $39.4m.
According to this morning’s stock exchange news service RNS announcement : “The offer was oversubscribed with strong interest from a variety of reputed global investors across the United Kingdom, United States, Africa, Europe, Middle East and Asia. Dominant allocation to Global long only, strategic and pre-IPO investors.”
There is an over-allotment option of 67.6 new shares which, if exercised in full, would account for approximately £54m of the offer. Including the overallotment option, the market capitalization at this afternoon’s price is some £2.6bn ($3.2bn), down from the offer valuation of £3.1bn.
After the IPO the free float was 19% but after including pre-IPO investors holdings the free float will be over 25% and it aims to be included in FTSE UK indices.
According to the RNS announcement, Raghunath Mandava, CEO of Airtel Africa, said: “We are delighted by the strong response we have received.. This is a proud moment for the team that has built Airtel Africa into the second largest mobile operator in Africa. We are now the first telecom company to simultaneously list on the Premium segment of the London Stock Exchange and Nigerian Stock Exchange through an IPO.”
According to our article in January and this month in here and today’s article in the Financial Times a consortium of investors including SoftBank Group, Singapore’s sovereign wealth fund Temasek, Singapore Telecommunications and private equity firm Warburg Pincus invested $1.25bn at a valuation of around $4.4bn last October. In January this year Qatar Investment Authority invested $200m at a valuation closer to $5bn.
At that stage it was anticipated that the London and Nigeria IPOs would raise $1.25bn.
The IPO was advised by 8 global banks: JP Morgan, Citigroup, BofA Merrill Lynch, Absa Group Limited, Barclays Bank PLC, BNP Paribas, Goldman Sachs International and Standard Bank.
Indian parent Bharti Airtel aims to use the funds to slash debt and free cash to combat rival Reliance Jio Infocomm in India.
Airtel Africa is the holding company for Bharti Airtel’s operations in 14 countries, including Kenya, Tanzania, Nigeria and Ghana. It is Africa’s second largest telco with over 94m customers, and ranked in the top 2 carriers in most of the countries where it operates, offering 2G, 3G and 4G services, plus mobile commerce through Airtel Money.
Performance had improved after years of losses against financially stronger telco players in Africa, including Vodacom. Rising mobile data consumption had helped it reach a first full year of profit and the figures for the year to 31 March were revenue of more than $3bn and operating profit of $734m.