MTN Nigeria has denied any wrongdoings regarding the sales of its shares which the telecommunications company listed on Thursday, May 16, 2019. Note that some of the company’s shareholders have since engaged in off-market trading which was limited to same stockbrokers.
“MTN Nigeria Communications Plc (MTNN) is aware of media reports that make a series of allegations about the listing of MTNN on the Nigerian Stock Exchange (NSE). These reports are incorrect and misleading.”
What happened: The shares of MTN Nigeria are currently scarce in the stock market. This has led to claims that investors are being shutout from taking up shares in the company. The fear was confirmed when shareholders of the company traded shares between themselves, making it impossible for stockbroking outfits to bid on behalf of their clients.
In the meantime, MTN Nigeria is not willing to issue new shares. This is why the company did not list by an IPO (initial public offer), which would have required it to make new shares available for new investors. The company says when the time is right, it will have a free float of about 35%.
MTN Nigeria’s stake division: MTN Group has 78.8%, Nigerian investors account for 19.4%, while other investors own 1.8% of the shares in MTN Nigeria.
No crime committed: MTN Nigeria listed on the Nigerian Stock Exchange by way of introduction. What this means is that only shareholders who are interested in putting their shares up for sale can do so. As confirmed by the NSE, no rule compels the shareholders of a listed company to tender their shares for trading; they can only be urged to make it available.
So, what’s the confusion? MTN Nigeria listed with a trading price of N90 per share and hours afterwards, the share price had risen by 10%, the minimum required by the NSE. It later closed the market with N108.90 per share.
When the shareholders engaged in off-market trading, the share price was fixed at N125 which is more than what it closed the market with last week Monday.
With the shares being the most-sought-after by investors on the NSE, it is understandable that interested investors or shareholders looking to increase their shares will be willing to pay more than the share price to get it.
About MTN Nigeria share price: According to MTN Nigeria, the valuation of the company was uncertain due to the outstanding case involving the Attorney General of the Federation. This made it difficult to determine a fair price for the company’s stock.
The associated risks and potential returns could not be fairly assessed and priced. As a result, and in the best interest of all shareholders.
So MTN Nigeria could have traded above its listing day share price but factored in its outstanding case which could impact the value of the telecoms company.
REMINDER: FGN Ijara Sukuk Bond auction closes on 2nd June 2020
Proceeds from the Ijara Sukuk Bond auction will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country.
The Debt Management Office (DMO), on behalf of the Federal Government, has reminded the general public that the offer for subscription to the N150 billion FGN Ijara Sukuk Bond will close on Tuesday June 2nd, 2020.
The offer for subscription was announced some days ago by the DMO, as Nairametrics reported. Below are the details of the offering.
The Auction: N150, 000,000,000 – Rental Rate of 11.20% per annum IJORA SUKUK FGN JUNE 2027 (7-Yr Opening)
Arranger: FBNQuest Mechant Bank Limited and Lotus Financial Services Limited.
Opening Date: May 21, 2020
Closing Date: June 2, 2020
Settlement Date: June 9, 2020
Summary of the Offer
Instrument Type: Ijarah (Lease) Sukuk
Issuer: FGN Roads Sukuk Company 1 Plc. on behalf of the Federal Government of Nigeria.
Units of Sale: N1,000 per unit subject to a minimum Subscription of N10,000 and in multiples of N1,000 thereafter.
Rental Payment: Payable Half Yearly.
Redemption: Bullet repayment on the date of maturity
Use of Proceeds: Proceeds will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country.
About Sukuk bonds
Sukuk is derived from the word Sakk, which can be translated to mean legal instrument, deed, and cheque. Sakk can also mean to strike a deal on a paper document.
The origin of Sukuk dates to 7th century AD, where the first Sukuk transaction took place in Damascus, Syria in the Great Mosque of Damascus (Umayyad Mosque).
Since Islam prohibits usury – collecting interest from your loans – interest-based bonds are banned in Muslim nations.
Difference between Sukuk and regular bonds
Sukuk indicates ownership of an asset. The assets that back Sukuk are compliant with Shariah. In other words, such assets adhere to the Islamic prohibitions on gambling, alcohol, tobacco, narcotics, and adult entertainment products and services.
Sukuk notes pay a fixed percentage return as a profit-sharing percentage of the underlying assets’ revenues.
Regular bonds, on the other hand, pay a fixed rate of return as interest (coupon) semi-annually or annually.
Just In: PPPRA reduces petrol price to N121.50 per litre
“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price…”
The Petroleum Products Pricing Regulatory Agency (PPPRA) has announced a new retail price band for oil marketers.
In a circular dated May 31st, as seen by Nairametrics, the downstream regulator said oil marketers are now expected to sell petrol within the price range of N121.50 and N123.50. Part of the circular said:
“Please recall the recently approved pricing regime which became effective March 19, 2020, and the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations.
“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price with the corresponding ex-depot price for the month of June 2020, as follows; price band N121.50 – N123.50 per liter.”
Hedge funds, institutional investors rush to own stakes in Bitcoin
Hedge funds are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.
With global economic uncertainty gradually becoming a daily norm, institutional and hedge funds around the world have been rushing to have a stake in crypto assets which all have been outperforming other financial assets in 2020).
Just recently, a popular hedge fund based in New York –Grayscale Investments –caught the investment world by surprise by buying up Bitcoin (BTC) at a great rate in recent months.
Lennard Neo, the head of research at Stack Funds, told Cointelegraph that institutional investors have been seeking for other options, not just to provide returns, but also to hedge their existing portfolio from downside risks. Neo said:
“Similar to Grayscale, Stack has seen an uptick in investors’ interest — almost double that figures of pre-crash in March — in Bitcoin. I would not say they are ‘gobbling up BTC’ blindly but cautiously seeking traditional structured solutions that they are familiar with before making an investment.”
In addition, Paul Cappelli, a portfolio manager at Galaxy Fund Management, explained in detail the reasons for this demand. According to him, “we’re seeing increased interest from multiple levels of investors’ wealth channels, independent RIAs, and institutions.
“The recent BTC halving came at an interesting time amid the COVID-19 outbreak and the growing unease about quantitative easing. He noted: “It clearly demonstrated BTC’s scarcity and future supply reduction as concerns deepened around unprecedented stimulus by the Fed with the CARES Act.”
Also, Michael Sonnenshein, the Managing Director of Grayscale Investments, explained briefly why his firm uses Bitcoin as an option in hedging its firm’s portfolio position.
“All three are facing issues this time around. Bitcoin has emerged as an alternative hedge, operating independently of the dramatic monetary policies enacted by central banks,” he said.
What you need to know about Hedge Funds
They are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.