Nigeria’s biggest telco, MTN Nigeria, has announced that starting from Wednesday, 1 December 2021, retail investors can purchase up to 575 million shares held in MTN Nigeria at ₦169 per share—lower than its share price on the stock market. This public offer is in line with MTN Group’s commitment to reduce its shareholding in MTN Nigeria from 78.8% to 65% over time. MTN listed its Nigerian business two years ago at ₦90 per share, becoming the second-largest stock by market capitalisation; its share price has since grown by about 100%.
Notably, this public offer is primarily digital as the shares can be purchased online. Bolaji Balogun, CEO of Chapel Hill Denham, an investment banking firm leading the public offering, explained this to TechCabal.
“The beauty of it being digital is that a lot more people can participate. The customer experience is a lot better; you can complete your purchase within 3-5 minutes. It also reduces the amount of paper that’s going to be used in printing share certificates,” Balogun said. “In all, we recognise that there are Nigerians who don’t have access to a smartphone or the internet, so they can go into any money deposit bank or a nearby MTN shop/agent to make more inquiries.”
The offer, which is open until Tuesday, 14 December 2021, will provide many Nigerian retail investors with an opportunity to own shares in MTN Nigeria.
The minimum amount of shares that can be bought is 20 units. To encourage people to buy more, the MTN offer includes one bonus share for every 20 purchased, subject to a maximum of 250 free shares per investor—an incentive open to retail investors who hold shares for at least 12 months after allotment.
Balogun added that he believes the digital sales of these shares will increase financial literacy on stocks but also expressed concern that retail investors should be wary of buying from just anyone or platform.
“There are five investment bank/issuing houses mandated to sell: Chapel Hill Denham (the led), Rand Merchant bank, Renaissance Capital, Vertiva, and Stanbic IBTC. In addition to this, all the (about 200) stock broking firms in Nigeria can sell,” he said. “The primary authorised digital platform to buy from is PrimaryOffer, as seen on MTN’s site.”
The payment for the shares on PrimaryOffer is facilitated by Flutterwave. In addition to these, Fintech platform, Chaka, on Wednesday announced that it’s partnering with Renaissance Capital to give its customers access to this public offering.
It’s important to note that the mobile money agents and MTN shops only provide information on how people can purchase from the aforementioned authorised parties.
In response to this public offering announcement, MTN Nigeria’s share price fell 10% on Wednesday to a five-week low, a logical response as investors rushed to buy the lower-priced MTN public offering shares.
“In my 30 years of issuing shares, I’ve never seen this number of applications in the first few hours,” Balogun said. “People typically wait until the last few days to start buying. It shows that there’s a huge benefit in doing this digitally.”
MTN disclosed that if the 575 million ordinary shares are oversubscribed before the closing date, another 15%, which translates to 86 million more shares, would be offered to the public.