The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Airtel Uganda Ltd shares commenced trading on the Uganda Securities Exchange this week amidst concern over the apparent lack of interest by Ugandans in investing in equities.
The company’s Initial Public Offer attracted a 54.45 percent subscription, a sharp contrast with the IPOs of companies like Stanbic, Uganda Clays, Quality Chemicals, and Umeme, more than 10 years ago.
More recently, another company, MTN Uganda, saw its IPO undersubscribed by almost 36 percent in 2021.
After the ringing of the bell signaling the going live of Airtel shares on Tuesday morning, Uganda Securities Exchange Chief Executive Officer, Paul Bwiso showed concern about the trend especially by retail (small individual) investors staying away.
Bwiso said there is a need for further sensitization of the public about equity as an investment alternative.
The initial public offer opened on August 30 and closed on October 27, having been extended for a week, “to enable more participation by the retail (Ugandan) investors,” according to Airtel Uganda Managing Director, Manoj Murali.
A joint announcement by Absa Uganda Ltd, the transaction advisor, and Crested Capital, the lead sponsoring broker, published by Airtel, shows that 4.36 billion shares (just over a half) were allocated. These include sale shares and incentive shares.
Bwiso differed from the view that the two telecommunications companies were unattractive to the public, instead saying that it is a general market attitude, the reason foreigners are dominating the local markets.
The National Social Security Fund (NSSF) purchased shares worth 199 billion shillings or 10.55 percent of the total outstanding shares of the company.
Keith Kalyegira, the Capital Markets Authority Chief Executive Officer, said despite this, there was an indication that the investors had confidence in the Ugandan market, but suggested a new approach to going public.
He said, for example, that the immediate listing of shares just after the IPO might have an impact on the public response, hence the possible need to delay the trading longer.
Professional investors will hold 10.55 percent of the total shares outstanding of Airtel Uganda, with retail investors holding 0.34 percent, according to the results of the IPO which attracted 4,614 subscribers.
The company offered 8 billion (20 percent) shares to the public at 100 shillings a share, while, effectively, due to the incentive bonuses, retail investors paid about 90 shillings for a share.
However, according to Bwiso, there is a higher likelihood that the price of a share on the USE will most likely go up in a short time because there is an upcoming share dividend payout this year.
This, according to him will, compel those holding the Airtel shares to raise the prices due to the anticipated demand ahead of the dividend payout.
The IPO and consequent listing by Airtel were in line with the requirements of the licensing requirements that the Uganda Communications Commission issued for the National Telecommunication Operator license in 2019/2020.
The telecommunication companies are required to sell to the public at least 20 percent of their shares.
On what next, now that Airtel has sold just over 10 percent of its shares, Manoj Murali, the company’s Managing Director, says they will await advice from the regulators on the way forward.
He says that they are interested in staying and taking part in the growth of the capital market.
After ringing the bell, Airtel Uganda became the 11th local company and the second telecommunications company to be listed on the USE.
MTN Uganda went public in 2021 having raised 535.9 billion shillings from 64 percent of the 4.5 billion shares it had offered.
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