Kenyan Investors Invited to Snap Stock as MTN Uganda’s IPO Goes for 200 UGX Per Share

MTN Uganda has set the price of its initial public offering at 0.0558 dollars (200 Ugandan shillings) per share.

The telco unit received regulatory approval last week to offer 20 percent of its shares in an IPO in a bid to raise 1.2 billion dollars (approximately 132 billion Kenyan shillings) from local investors from the East African Community (EAC) bloc.

“The MTN IPO is officially open,” MTN Uganda Chief Executive Wim Vanhelleputte told the press.

He added that the IPO would close on November 22 with the shares starting to trade on December 6.

MTN Uganda is offering 4.5 billion shares. This would value the stake at 250 million US dollars and MTN Uganda at 1.25 billion dollars, the company said.

According to Stanbic Bank Uganda, which owns the sponsoring brokerage SBG Securities Uganda Ltd, Ugandans would have first priority, followed by investors in East Africa and then investors from outside the region.

MTN Uganda is offering interested investors free shares of between five and 10 units for every 100 units allocated. This corresponds to an effective discount of five to 10 percent of the purchase price. That is if an investor gets his full allocation and the incentive shares.

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There are no allocation quotas but Ugandan investors will be given priority in case of oversubscription. This will offer Kenyan investors unlimited room to snap the stocks.

“As part of the offer, and in alignment with the objective of broadening Ugandan shareholding in MTN. The selling shareholder will transfer incentive shares at nil cost to the categories of qualifying applicants that apply for and are allocated the sale shares,” the prospectus says.

“Accordingly, eligible applicants will receive an allocation of sale shares which the applicants will be required to pay for and, in addition, an allocation of incentive shares which the applicants will not pay for.”

“MTN Uganda will target in the medium term a dividend pay-out ratio of at least 60 percent of annual profits after tax,” the company said in its prospectus.

MTN Uganda said it would announce the allocation result on Dec. 3.

MTN Uganda has 15 million subscribers, also offers mobile money financial services. The money financial services are the company’s biggest growth area as more people continue to seek cashless transactions amid the COVID-19 pandemic.

The firm largely competes with a unit of India’s Bharti Airtel. But it is projected that MTN Uganda could build more subscribers after another rival, Africell, said it was quitting the market.