MTN, Nigerians’ love story continues in public share offer

● FPIs, Asset managers, PFAs, insurers scramble for a bite of MTN Nigeria offer 139.47% ● More female retail investors in participation as CSCS opened 114,938 new accounts

THE LOVE STORY BE TWEEN South Africa’s mobile telecommunication giant, MTN, and Nigerians, which began over 20 years ago when the telco took a bet on the country by buying up one of the mobile phone licences at auction, appears not to be waning. Nigerians have demonstrated this seemingly undying love affair once again with a full frontal embrace of the telecommunication company as they snapped up its share offer to the investing public in its Nigerian subsidiary, MTN Nigeria.

The outcomes of the share offer, which opened last year, were revealed last week and they showed an overwhelming embrace of the offer to the point that an oversubscription forced the company to bring out more shares from its reservoir to meet the demand.

And this was how it went down. MTN Nigeria recorded an oversubscription in its offer of 575 million shares by as much as 139.47 percent with valid applications for 801.97 million units, leading to an activation of additional units of the shares to reach 661.25 million.

This was a landmark transaction for the company and for the stock market as well, reflecting the growing confidence in the Nigerian capital market which has seen more young and techsavvy investors play active roles in trading activities.

In November 2021, MTN Group Limited, which controls 78.83 percent of the issued and fully-paid shares of MTN Nigeria, through its two subsidiaries, MTN International (Mauritius) Limited and Mobile Telephone Network N.I.C.B.V told of plans to divest 575,000,000 of its holdings, representing 3.58 percent of its total holdings in the Nigerian subsubsidiary. The company cited its intention to introduce a wider base of Nigerian shareholders into the ownership of MTN Nigeria, while also achieving an increase in the company’s free float on NGX as the key reason for the divestment. This claim can be supported by the fact that in recent times, MTN Nigeria has been increasing the localization of its management, appointing Nigerians into key managerial roles.

Regardless of the intentions, this is the first series of a larger equity shelf programme where up to 2,814,830,718 shares of MTN Nigeria would be offered for sale to the investing public and will, in turn, see MTN Group possibly down its holdings in the Nigerian subsidiary to 65 percent from the current 78.83 percent. This offering was in line with the incentive structure of one free share for every 20 purchased at N169 per share, subject to a maximum of 250 free shares per investor. Thus, an additional 4.28 million MTN Nigeria shares will be allotted to qualifying investors who hold their allotted shares until January 31, 2023.

About 76 percent of the total applications via the digital channel were from female investors as over 85 percent of these applicants were under 40 years of age and indicates the rising use of digital channels or platforms for the trading of listed local or offshore securities. Consequently, it was reported that over 89 percent of retail offer subscribers applied through the Primary Offer platform (mobile and web), and 114,938 new Central Securities Clearing System (CSCS) accounts were opened by First-time investors. This amounts to a total of 126,720 retail investors who submitted valid applications and allotments have been fully received.

On the other hand, institutional investors including corporates, foreign portfolio investors, asset managers, pension funds, and insurance companies, that participated in the bookbuild process received 72.09 percent of their applications where the Nigerian Pension Fund represents about 6.5 million of Nigerian contributors.

Ralph Mupita, chief executive officer, MTN Group, said: “We are pleased that this offer has given so many Nigerians the opportunity to become owners of MTN Nigeria. With over 6.6 million Nigerians directly or indirectly becoming shareholders in MTN Nigeria, the objective of broadening the shareholder base, and creating shared value has been achieved. We are proud that our Offer was the first Nigerian public offer to use the digital application platform, PrimaryOffer, which enabled wider investor participation across Nigeria. We thank the Nigerian authorities for their support of this Offer. We remain committed to playing our humble role in driving digital and financial inclusion in Nigeria over the medium.”

Also commenting on the successful transaction, Karl Toriola, CEO, MTN Nigeria said: “We are delighted to welcome so many new shareholders to the MTN family, up 11.6 times from the number before the offer. It has been inspiring to see so many Nigerians, many of whom are young, acquire shares for the first time, and use a digital platform to do so. This is the beginning of a journey to broaden our shareholding and there will be more opportunities to participate,” he said.

The offer programme had Chapel Hill Denham Advisory Limited acted as lead issuing house and bookrunner, Rand Merchant Bank Nigeria Limited, Renaissance Securities (Nigeria) Limited, Stanbic IBTC Capital Limited, and Vetiva Capital Management Limited, acted as joint issuing houses and joint bookrunner, respectively.

In his remarks, Bolaji Balogun, CEO, Chapel Hill Denham, noted that “Chapel Hill Denham is honoured to have worked with MTN to complete Nigeria’s First digital and predominantly green offering. I wish to thank the SEC, the NGX, the CSCS, all the professional firms, and other stakeholders, for delivering a big win for Nigeria’s capital markets in enabling the adoption of PrimaryOffer and this transaction marks a new and exciting future. Over 90% of subscribers to the Offer were first-time participants in the capital markets and MTN Nigeria’s strong investment case made this possible.”

Temi Popoola, CEO, NGX, said, “NGX is proud to have worked with MTN Nigeria, Chapel Hill Denham, and other parties to the transaction in advancing Nigeria’s capital market through the adoption of forward-looking technology. In the NGX era, we are resolute in our commitment to democratise finance in Nigeria in order to ensure every type of investor has access to public markets where they can invest in companies they believe in and reap value. With the digitised MTN Nigeria offering, we have made a tremendous stride in our plans for a full digital transformation of the Nigerian capital markets and we look forward to building on this”.

Haruna Jalo-Waziri, CEO of the Central Securities Clearing System Plc, said: “We are excited to be part of the innovation brought by the Offer, which afforded the successful launch of PrimaryOffer digital application platform.

This further buttresses the necessity for digital transformation, allowing market access for all categories of investors, including institutional and retail investors within and outside of the country. At CSCS, digital transformation has been the core of our strategic direction. We will continue to collaborate with our participants, issuers and other stakeholders to efficiently and effectively ease market access with innovative solutions through the investment cycle.”