MTN Zakhele Futhi shareholders sell at rockbottom prices after rands/cents confusion
MTN ZAKHELE Futhi (MTNZF) shareholders with no experience in trading have sold their shares at rock-bottom prices in the first two days of the listing of the black economic empowerment (BEE) vehicle, because they thought the prices were in rands and not cents.
Last Monday (November 25), the shares bought by previously disadvantaged shareholders three years earlier at R20 each ended the first day of listing at a lowly R4.80 after BEE shareholders traded some 64 000 shares.
The following day, nearly 33 000 shares were traded at a volume-weighted price of R9.39. The share recovered thereafter and was trading at R17 yesterday.
A BEE shareholder who preferred to remain anonymous, and who spoke on behalf of other BEE shareholders, told Business Report that they were duped into buying the shares.
“We were promised to be assisted by professional traders by MTN. However, that never happened. Many of us, including myself, are not experienced traders and, as a result of this, I sold 50 shares mistakenly for R238,” the shareholder said. “I would like to ask your professional opinion: how much could one sell each share for at the moment?”
MTN issued a statement four days after the listing stating that there had been confusion over the share price.
“We noted with concern that some MTNZF shareholders encountered confusion when trade opened on Monday and thought trades were denominated in rands rather than cents,” MTN said.
“We sent an SMS as soon as we understood what had potentially caused the low share price, again clarifying this aspect of trading for all shareholders. The denomination was clearly indicated on the trading screen, and MTN Zakhele Futhi has provided extensive education, including workshops and online guides.”
MTN said “due to the nature of trading and the fact that trades are matched and concluded with buyers, it is not possible to reverse or take subsequent action regarding any transactions or orders submitted”.
MTN and the JSE were not available for comment in the past two days.
The aim of MTNZF, which was set up in 2016 with a three-year lock-in in trading in the shares, was to enable previously disadvantaged South Africans to get a cheaper investment into the MTN Group than via the group’s ordinary shares.
The MTNZF listing, comprising some 123 million fully paid-up shares, was expected to last for five years. The BEE vehicle owns some 4 percent of MTN, and initial debt estimated at about R5 billion, which was raised by MTNZF to buy the stake in MTN.
When the scheme was launched in 2016, MTN’s share was trading at more than R121 per share, with every prospect that it would continue rising, but the share price has fallen 28 percent since then to R86.92 at the close of trading yesterday. The highest price paid for an MTN share over 52 weeks has been R114.45.
MTNZF closed 2.53 percent higher at R17.45, but has wiped off more than R200m in the past five days.