Nigeria’s 3rd largest telecom company Airtel is set to debut on the Nigerian Stock Exchange within the next few days as the company looks to reduce its existing debts.
Announced a few weeks back, Airtel had said it plans to undertake a listing of its shares on the Nigerian Stock Exchange concurrently with its IPO on the London Stock Exchanges. This will see Airtel become the second telco to list on the NSE following market leader, MTN Nigeria that listed last month.
According to a timetable by the telco, the listing on the NSE will be taking place on Thursday, July 4, 2019. In a prospectus released by Airtel, the global Initial Public Offer (IPO) will put shares worth $750m out for public subscription. This means that the amount Airtel Africa intends to raise from both its London and Nigerian IPO is $750m (about N270b) to deleverage its balance sheet to achieve a targeted leverage ratio of 2.5x.
And while official offer price and size will be made public tomorrow by the telco, it has made it known that it will using a book-building exercise to determine the issue price. However, the telco is targeting between N363 and N454 per share, but since its a book-building process, it might be readjusted according to the demand.
The pricing statement and allocation of ordinary shares will also be announced tomorrow, new ordinary shares will be alloted to shareholders on Saturday, June 29 after which they will be credited into investors accounts by Wednesday, July 3rd.
So, is this a good venture if you are looking to invest? Well, don’t get too excited just yet.
Airtel is planning to sell its Nigerian unit’s shares exclusively to high net worth investors (HNIs) and qualified institutional investors (QIIs) through a book building process.
The Offer consists of an institutional offer only. Ordinary Shares will be offered pursuant to the Global Offer in Nigeria to Qualified Institutional Investors and High Net Worth Investors as defined in Rule 321 of the Nigerian SEC Rules pursuant to a book building process (the “Nigerian Offer”).
Airtel
A high net worth investor is identified as someone with $3 million or more in investable assets and around $1 million in liquid financial assets. So unless you are an HNI or a qualified institutional investor, the Airtel IPO is not for you.
This move by the telco giant is similar to the route MTN took when it listed as the market leader and opted for a “listing by introduction” – a way of listing shares already held by investors.
But this doesn’t come off too surprising. Airtel is looking to raise money to reduce its existing debts and embarking on an IPO targeted at “an investor shy” public may not be a good approach. Also, the telco also plans to list on premium-listing segment of the London Stock Exchange (LSE) at the end of the Nigerian IPO, these is why the telco is possibly shifting its focus to a particular sect of people with deeper pockets.
And if that’s the case it is most likely that Airtel has already located investors (HNIs and QIIs) which it intends to sell shares to. This would mean that the whole process could be done and dusted in few days like it was the case of MTN.
This is quite disappointing for several interested investors because many had anticipated an offer that provided other investors (Retail Individual Investors (RIIs)) to participate.
But as disappointing as it is for the several Nigerians that will be affected it’s a good one for the telco as it shores up its debts.
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