What you need to know:
- Institutional investors are currently taking advantage of a promotion where shares are priced at Shs47, whereas retail investors pay Shs71.
Uganda’s National Social Security Fund (NSSF) has declared intent to invest Shs199billion to acquire 10.55 per cent of Airtel Uganda's 8billion shares in the company's initial public offering (IPO) on deadline day.
“The Fund’s investment in Airtel gives an opportunity for millions of NSSF members to own part of a successful company in a fast-growing sector known for innovative services,” NSSF Managing Director Patrick Ayota and Airtel chief Manoj Murali said in a joint Friday statement.
The amount could have been more or close to Shs300billion, but Airtel incentivized its offering to the institutional investors which it says “are long time investors and acquire the most stake.”
Institutional investors are currently taking advantage of a promotion where shares are priced at Shs47, whereas retail investors pay Shs71.
Preceding its scheduled November 7 listing on the Uganda Securities Exchange, Airtel is in dire need of institutional investors to boost its 8billion share sale to the general public.
Airtel is offering to sell 8 billion shares, or 20 per cent of its total equity, to the public. However, it has reportedly struggled to find big investors, who are essential for any business looking to list on Uganda's stock exchange (USE)- as retail investors have shunned it due to low economic power and frequent volatilities.
As a result, the telecom company decided to extend the deadline to October 27 for its initial public offering (IPO) and increase share incentives in order to attract more Ugandan investors. Airtel is selling each share per value at Shs100.
As per the license requirement, Airtel has to sell 20 per cent of its stake to Ugandan investors. This will make it the second telecom company to list on the Ugandan stock exchange after MTN in 2021.'
Since the pension fund is the largest institutional investor in listed companies on USE, NSSF's offer appears to be significantly less than what Airtel had anticipated even though the fund has been given a high bargain of a 53 per cent discount.
Prior to MTN Uganda's listing in 2021, the NSSF invested Shs350billion in the company, giving it a significant share in the 4.47 billion share sale to the public. MTN Uganda is Airtel's main competitor.
As a result, NSSF became MTN's second-largest shareholder and helped the company meet 60 per cent of its subscription goals.
On Friday, financial market experts told Monitor that although Airtel had been working with NSSF to resurrect its IPO, the pension fund remained wary due to its past experiences with companies such as Safaricom, Uganda Clays, and New Vision Publishing Company.