MTN Uganda Share prices gained on the first day of trading on the Uganda Securities Exchange, from the Initial Public Offer price of 200 shillings per share.
The shares traded at an average 205 shillings per share, which was a gain of 2.5% from the IPO price, erasing fears of underperformance in the first days of the listing.
The fears were due to the result of the IPO that showed that the public had purchased only 65 per cent of the shares that the company offered in the IPO and many reasons for the under subscription were suggested including low demand.
However, in the first 10 minutes of trading on the USE Monday registered a turnover of 64,000 shares while the value of MTN Uganda as a company increased by 189 billion shillings. This caused excitement among the leadership of the company, Stanbic Bank who the transaction advisors, and SBG Securities the lead broker, as well as the shareholders.
MTN Uganda Chief Executive Officer, Wim Vanhelleputte said that they encountered a lot of challenges during the IPO period, but mainly due to the lack of awareness amongst the public largely because of absence of IPO activities in Uganda in a long time. He also blamed misinformation especially on social media about the company and the listing process in particular, to the extent of the company and the Capital Market Authority being sued for alleged violation of regulatory procedure, which suit did not succeed.
The sale of at least 20 percent shares to the public is one of the conditions that are given to companies seeking to get a National Telecommunication Operator (NTO) license.
Now, at 65 percent subscription, the company is yet to meet the requirement, according to the Uganda Communications Commission, of having a local ownership of at least 20 percent.
This currently amounts to about 15 percent of the company owned by Ugandans. The capital markets authority has however given MTN a grace period of three years and MTN CEO Vanhelleputte says that this will be met within that time frame.
In what has so far been registered as the largest initial public offering in Uganda’s history, and in Africa this year, the primary share sale raised 535 billion shillings from applications for 2.9 billion shares (including incentive shares).
MTN says that the applications that were not successful were the ones which had errors, mostly regarding the identity of the applicants. The Acting Chairman of USE, Richard Byarugaba says the private investors should learn from MTN experience that there is a lot of money for capital though the stock market instead of going for the expensive commercial bank loans.