In what will be the first-ever sale of shares through a mobile phone to Uganda’s public, MTN Uganda’s pending listing of 20 per cent of its stake is set to turn around the fortunes of the Uganda Securities Exchange after years of dull business at the bourse.
MTN Uganda is set to offload nearly 4.5 billion shares to the public at a price of Shs 200 per share. Some of these shares can be bought through the mobile phone, while others from the registered stock brokers. For every 100 shares bought through the mobile phone, a customer will get 10 bonus shares, while those from the stock brokers five bonus shares. The minimum amount of shares one can buy is 500.
In total, MTN is looking to shore up nearly Shs 900 billion, or $250 million, from this public sale. Should the sale be oversubscribed – that is when there is more demand than supply of the shares – then customers will be allowed to buy up to Shs 5 million, with retail investors given first priority.
Wim Vanhelleputte, the chief executive officer at MTN Uganda, said the proceeds from the Initial Public Offer will be invested in the network expansion and fintech such mobile money solutions.
The number of shares MTN is bringing, and their total value, is set to expand the size of the Uganda Securities Exchange, and end a long wait for market analysts who, over the last five years, had been calling for MTN Uganda’s listing.
“The benefits of [MTN] coming to the market are immense – from capital raising through corporate debt issuance and secondary public offers, to offering an exit avenue to founder shareholders, and the immeasurable public relations value that comes with being a quoted company,” Keith Kalyegira, the chief executive officer of the Capital Markets Authority, said.
Analysts said that one of the reasons as to why the Uganda Securities Exchange has been conducting low trades is because there are not many products listed, and, therefore, fewer shares being traded.
There are 16 companies listed on the Uganda Securities Exchange and eight of them are local, while the rest are cross-listed from Kenya.
However, trades have been low over the last couple of years, and some have blamed the low volumes for the exit of top brokers such as African Alliance. This time, though, the market has been vibrant for Uganda’s standards.
According to a market performance report from the Uganda Securities Exchange, trading in the second quarter “registered a tremendous increase” with a turnover of Shs 5.9 billion compared to Shs 3.4 billion registered in the first quarter 2021.
The coming to the market of MTN is slated to further spur that growth. According to the schedule, the sale of the shares will end on November 22, 2021 at 4pm. The company will then list the shares on the Uganda Securities Exchange on December 6, 2021.
MTN’s decision to list 20 per cent of its shares is in line with the license requirements issued by the Uganda Communication Commission.