MTN Uganda share sale oversubscribed on incentives

MTN Group shares sale in Uganda attracted oversubscription courtesy of incentives dangled including free stakes and inclusion of the new shares in the company’s latest dividend.

Photo credit: File | Nation Media Group

The sale of additional shares by South Africa’s MTN Group in its Ugandan subsidiary was oversubscribed by 2.3 times, reflecting the impact of incentives that included free shares and the inclusion of the new shares in the company’s latest dividend issue.

The share sale, which was open to investors from Kenya and other foreign jurisdictions, saw the firm offload 1.57 billion shares at Ush170 (Sh5.82) per unit, this being an equivalent of 7.03 percent of the company’s issued shares in Uganda.

The company offered the additional shares to the public to comply with a Uganda government requirement to offload a minimum 20 percent stake to minority investors.

The initial IPO in November 2021 saw the telco manage to sell a 12.97 percent stake that was priced at UGSH200 per share (Sh6.86 at the current exchange rate).

A statement from the company yesterday said the new offer received subscriptions of three billion shares—an oversubscription of 2.3 times— meaning that some investors will receive a lower allocation and refund.

The company said it would disclose further details on allocations and results of the offer by June 20.

“The number of sale shares allocated to successful applicants will include the corresponding number of incentive shares that each individual applicant is entitled to in accordance with the terms of the offer,” the company said in its statement.

“Applicants who do not receive the full quota of sales shares applied for, or applicants whose applications were not successful will have the application funds due to them refunded by June 27, 2024.”

To attract investors, the offer which ran between May 27 and June 10 was priced at a discount (Ush170) compared to the original IPO price of Ush200.

Investors were also offered incentive shares at a rate of 30 shares for every 140 applied, which effectively yielded another discount of 17.8 percent on the offer price.

In addition, the company moved the book closure date of its final dividend of Ush6.40 (Sh0.22) from June 4 to June 12 to enable those participating in the secondary sale to qualify for the payout.

The company further set a lock-in period of six months for institutional investors buying the secondary offer, to prevent a potential oversupply of shares and subsequent lower trading prices once the new units hit the market.

MTN Uganda’s listing on the Uganda Securities Exchange (USE) attracted notable Kenyan investors including billionaire Baloobhai Patel, The Central Bank of Kenya (CBK) pension fund, and the National Social Security Fund (NSSF).

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