Ahead of MTN Nigeria’s Initial Public Offering (IPO) which is expected later this year, sources close to the situation are claiming that the company intends to target retail investors with about 30% of its ordinary shares.
This amount of free float is aimed at ensuring that a reasonable amount of the company’s shares get to be owned by the retail investors, otherwise known as the investing public.
The Nation reports that the notable telco’s earmarked 30% free float is “significantly above the minimum listing requirement at the Nigerian Stock Exchange (NSE)”.
A look at MTN’s current shareholding ratios
About 75.8% of MTN Nigeria’s shares are currently held by MTN Group. This makes the South Africa-based group the majority shareholder in the leading Nigerian telco. Similarly, about 19% equity is held by some high net-worth Nigerian investors. Also, 2.8% of the company’s shares are currently owned by MTN NIC BV, while 1.7% is owned by Public Investment Corporation Limited.
According to the unnamed sources earlier referenced, MTN Nigeria Limited plans to use its Initial Public Offering to change the current make up of its shareholding in a way that it favours minority shareholders.
More on MTN’s planned IPO and the proposed 30% free float
Anytime this year, MTN Nigeria will be listed on the NSE’s premium board.
Companies listed on this board are expected to have at least 20% free float, which translates to about ₦40 billion. This 20% free float represent shares held by ordinary shareholders in quoted companies. In other words, companies on the NSE premium board must set aside at least 20% of its shares for potential investors asides such companies’ primary shareholders, associate companies/subsidiaries, directors etc.
This 20% free float rule by the NSE is aimed at preventing “undue concentration of securities in the hands of the core investors and related interests”, The Nation reports. This is important because aside availing the investing public the opportunity to take advantage of IPOs as means of wealth creation, this rule also forestalls the possibility of stock prices’ manipulation which can occur when securities are concentrated in the hands of a few investors.
It is, therefore, a very good development that MTN Nigeria Limited is proposing a 30% free float.
Meanwhile, many details about MTN’s IPO are yet certain…
From all indications, the MTN Initial Public Offering is earnestly expected this year. Some analysts have projected that the company will raise between $400 million and $500 million during the IPO. These projections are made in view of the fact that the company’s shares will be viable, thereby attracting lots of investors.
However, an MTN spokesperson who spoke to the News Agency of Nigeria (NAN) on condition of anonymity, recently debunked rumours that MTN had earlier declared to offer shares valued at $500 million during its IPO.
The spokesperson also stated that MTN Nigeria Limited has yet to fix a definitive date for its IPO, a declaration that inevitably cast doubt over earlier speculations that the main event would happen before November and December this year.
Recall that the company had agreed to list on the NSE as part of the fulfillment of the sanctions slammed on it in 2015 by the Nigerian Communications Commission (NCC).