As the ground-breaking public offer of the 575 million units of ordinary shares of Nigeria’s telecom giant, MTN Nigeria, gets underway, feelers from the stock market indicate excitement that could lead to an oversubscription.
But the parties to the offer appear to have anticipated this by provide room to accommodate up to 15 percent oversubscription.
Stock dealers and the investors are said to be looking at the profile of the issuer, MTN, as well as some unique features of the offer to anticipate investor gains at post-offer.
The company is rated as one of Nigeria’s best run businesses, the biggest by revenue and strongest by profitability.
The most current financial statement of MTN Nigeria also indicates superior corporate earnings strength comparatively across all sectors with the basic earnings per share, EPS, at N10.82, almost double that of the best performing stock in the banking sector of the stock market.
The profitability strength was also demonstrated in the nine months 2021 results showing a 51.9 percent rise to N321 billion, the best growth rate in the Nigerian corporate.
The company’s revenue size is also intimidating in the corporate Nigeria, at N1.21 trillion, in the third quarter 2021, the first corporate to cross the trillion mark, growing at 23.6 per cent year-on-year.
The investor community is now excited at the prospect of owning a part of the business in the opportunity being offered by the on-going shares sales.
The excitement appears in line with the core objectives of the company in the public offer.
The Chief Executive Officer, Karl Toriola, said the offer was meant to further the process of broadening the ownership of MTN Nigeria Plc.
According to him the offer for sale of up to 575 million shares held by MTN Group in MTN Nigeria has been deliberately structured, ‘‘to ensure that it broaden our local shareholder base providing opportunity for as many Nigerians as possible to become shareholders in MTN Nigeria and share in the growth and value which this great business creates.’’
In way the public offer is not meant to raise capital; it is meant to be a sale down of the holdings of MTN Group in a structured process of just under 79% to 65%.
Also the company said this is not any form of exit of MTN Group from Nigeria, as they believe there is no MTN Group without MTN Nigeria and there is no MTN Nigeria without MTN Group.
According to Toriola, ‘‘ It is genuinely a desire to have as many Nigerians as possible to become shareholders in this business and share in the value we create in the future going forward and there is no deeper way to deepen the partnership between MTN Nigeria and the community and the people that we serve.’’
Also speaking along this line at the investors’ roadshow in Abuja recently, MTN Group President and CEO, Ralph Mupita, said the MTN Group had made a clear strategic decision to build shared value across its operations.
He added: “The best way we can do that is by enabling broad ownership in our operating companies. This offer is the first phase of that process in Nigeria, as we progressively reduce our shareholding from 78% to 65% over time. I am incredibly proud to be able to be here today, engaging directly with the Nigerian shareholders we hope will join us on the next phase of our journey.”
MTN had started its journey in Nigeria in 2001 with core group of Nigerian investors who provided the seed funding and who have been partners over the years as business has grown and thrived. The company marked 20yrs of operation in Nigeria this year and Toriola said there is no better way of marking it than to expand Nigerian’s participation in the shareholding of MTN Nigeria through the public offer of its shares.
On why this transaction is important to him, he stated: ‘‘We are successful because of our customers. People who queued at the very early days of GSM to spend N20,000 to buy SIM cards because it was a scarce commodity then, people who started making their calls under the umbrella which we called call centres but gradually started to own their own mobile phones as the economy and GDP of this country improved and they started migrating from the small voice phone to now smart phones; For us to share in the value creation with these customers and also non customers, (because the public offer is open to everyone) is something that is so important to us in MTN Nigeria and gives us a lot of joy.
‘‘It is one part of deepening relationship between MTN Nigeria and this country. We are Nigerian entity, led by Nigerians, staffed by Nigerians. We export talents from Nigeria to the rest of MTN Group.’’
The shares sales transaction has been structured to maximize long term retail participation.
To this end the parties to the offer intend to bring to the market a hybrid of digital and traditional public offer application process.
Notably, this the first digital application process running on a extensive network of licensed agents to ensure that it has as much broad footprint as possible and as much participation as possible.
The public offer team is on the move from the North to the South and from the East to the West of Nigeria, crisscrossing the country, to talk about the sales of the shares as opportunity for retail investors to share in the value MTN has created over the years in Nigeria.
This offer is the first paperless subscription in Nigeria through a primary offer administered by a Nigerian Exchange Limited, and this enables retail investors to subscribe for the shares electronically. But applications can also be received through issuing houses and authorized stockbrokers and banks.
The intention of the company is to build a local shareholder base of more than two million Nigerians while maintaining the focus of building the largest retail shareholders in the country.
Toriola said this would ensure and represents the best possible future and partnership for Nigerians and for MTN.
The public offer has been stretched from the way of Book Build with institutional investors which closed previous week. The book build process, according to MTN’s Chief Financial Officer, Modupe Kadri, ‘‘was to enable price discovery. It helped us to understand the demand and price sentiments from qualified investors.’’
The retail offer which will be open for two weeks is to enable many retail shareholders as possible to afford them the opportunity to participate in this execise.
A minimum of 10% of the shares in this offer is offered to the institutional investors in book build while the remaining 90% are now being offered to the retail shareholders at a fixed price of N169.
At the commencement of the offer last week the closing price of MTN shares at the stock exchange was N190, so instantly the offer opened at 11.05% discount or N21 per share.
The minimum subscription is 20 shares and in multiples of 20 thereafter. The good thing about this offer is that it includes an incentive of one free share for every 20 you buy up to a maximum of 250 shares per investor. It means for every 20 shares you buy you get 21 units provided you hold the shares for one year after allotment, in other words if you don’t dispose of the shares within 12 months, on the anniversary of the allotment you get the incentive.
Meanwhile the Chief Executive Officer of the Nigerian Exchange Limited, Mr Temi Popoola, noted that the MTN public offer is something remarkably exciting at the stock exchange.
He stated: ‘‘We have no doubt of the ability of this transaction to change the face of capital market investing in our country. MTN has demonstrated this in the offers similar to this they have done in other countries. The Exchnage has invested a lot, notably, human resource in making sure we get this transaction to where it is today.
‘‘The things that excite us about this transaction is investor confidence it has created. For a long time we have spoken about the absence of the retail end in our capital market; we have also spoken about the absence of a certain geography, the demography of Nigerians from the Exchange, and we think that a deal like this will help us address these, everything around investor confidence, financial literacy, and off course when you think through a lot of publicity that will come through this deal I think that will help to drive retail end growth in our capital market
‘‘The second thing is also the share number of investors in the capital market. ‘‘The figure of the current active investors is very low, and part of what we see is that this transaction will single-handedly change that to several multiples of what we currently have today and that is remarkable.
‘’The third and I think most important thing about this transaction is that it will be the first offer in the Nigerian capital market history that will be end-to-end digital, in other words, you can just from the comfort of your home through your device invest in this offer in a space of minutes, under 5mins; it has never happened before and I think this is really remarkable.’’