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Ugandan Capital Markets Authority (CMA) has said MTN’s listing is expected to double the size of the Uganda Securities Exchange (USE).
The USE, according to daily trading reports, currently has a domestic market capitalisation of about Shs4.3 trillion.
Therefore, MTN’s listing, Mr Keith Kalyegira, the CMA chief executive officer, said will offer USE a marked improvement, which might push capitalisation to above Shs8 trillion.
“This initial public offering [IPO] is going to double that figure [Shs4.3 trillion]. Advisors need to be engaged more and market sensitisation on the benefits and risks involved. We expect a marked improvement of liquidity in the market and the balance sheets of the intermediaries in pre and post IPO,” he said.
MTN is yet to announce the expected date of listing, however, the telecom has already indicated that the process is in advanced stages.
The telecom, which controls Uganda’s largest telecommunications market share (46 per cent), according to data from Uganda Communications Commission, has indicated plans to conduct an IPO, before going to float shares at the USE.
The move follows engagements with CMA and USE that are expected to grant approval for the sale of a 20 per cent stake of MTN to the public.
Speaking during a media briefing in Kampala yesterday, Mr Kalyegira also indicated that MTN’s listing will categorise Uganda as a frontier market in the Morgan Stanley International ratings, noting that USE, which was established in 1998, is expected to get a large boost in particular and the economy at large.
MTN’s IPO comes about four years since Cipla listed after conducting an IPO in which it raised about $46m (Shs168 b).
Before Cipla, Umeme had also conducted an IPO, raising about $66m (Shs235b).
Mr Paul Bwire, the USE chief executive officer, said a total of close to $623m (Shs2.2 trillion) has been raised through USE since inception in 1998 with 62 per cent of this raised through IPOs while the rest has been raised through secondary market offers and issuance of corporate bond.
Currently, he said, the size of the market as measured by market capitalisation is Shs20.7 trillion with the domestic market accounting for about Shs4.3 trillion. The MTN IPO presents an opportunity to as well raise the number of participating investors from the current 40,000, which according to experts is still low to create market momentum.
Mr Patrick Kaboyo, the Pearl Capital managing director, said MTN listing will be significant, because it is large company with a rough valuation of about $1.5b, excellent brand reputation and financially sound.
“In my own prediction, MTN stock will be a good buy, it will definitely be oversubscribed and depending on the share allocation approach, I expect huge presence of retail, pension funds and other institutional investors as well regional investors,” he said.
Licence requirement
According to Mr Charles Mbire, the MTN chairman, the listing is in line with the MTN Group’s strategic plan to create shared value, partly through ensuring broad-based ownership in its operating subsidiaries.
It is also in line with the provisions of MTN licence, which require its listing by the end of June 2022.
“The intention to float is a major step towards delivering on our plan to list on the USE,” he says, noting that: “It is a reaffirmation of our long-term commitment to expand investment opportunities for Ugandans. This will potentially be the largest IPO on the Ugandan market.”
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