Airtel IPO undersubscribed 

Airtel Uganda has reported that it sold slightly more than half of the eight billion shares it floated on August 30, returning a 45.55 per cent undersubscription. 

In a statement released Monday evening, Airtel data also indicated that it had realised only Shs211.4b, representing a return of 26 per cent, which was way lower than the targeted Shs800b.  

The offer, which has been running since August 30, has returned an allocation of 4.36 billion shares out of the available eight billion, of which 10.55 per cent was taken up by professional investors, while 0.34 per cent went to retailers.   

Airtel noted that 54.45 percent of the offer was subscribed with at least 4,614 investors taking up shares. 

The allocation details indicate that the National Social Savings Fund was the only institutional investor that bought into Airtel, having made an October 27 deadline buy of Shs199b for a 10.55 per cent stake. 

Airtel had in the days leading to the offer closure doubled incentive shares as it attempted to attract more investors to its IPO. 

The incentive shares heavily subsidized the offer price to about Shs47 for institutional investors from the initial Shs100, while it fell to Shs71 per share for retail investors.

“Following the offer, professional investors will hold 10.55 per cent of the total shares outstanding of Airtel, with retail investors holding 0.34 per cent,” Airtel said. 

The allocation means that NSSF will be the second biggest shareholder in Airtel after Bharti Airtel. 

While announcing the incentive share offer, Airtel had indicated that the move had been informed by the need to increase the participation of Ugandans, which had also forced the telecom to extend the closure date from October 13 to October 27. 

Both USE and Capital Markets Authority concede that Uganda’s equity markets are still facing low participation, due to low sensitization in addition to companies paying shareholders low returns when compared to other investment vehicles such as government bonds and bills. 

The last three firms to list on the USE have all been saved by NSSF as other institutional investors continue to shy away from equities due to an increase in losses and falling stock prices.  

Cipla Quality Chemicals, MTN and Airtel have all benefited from NSSF’s deep investment appetite even as in the year ended December 2022, the annual report indicates it was withdrawing its investment from some equities especially those in Kenya which made the Fund lose about Shs1 trillion in foreign exchange. 

Airtel will be the 11th company to list on the USE after MTN and the second telecom to list under the National Broadband Policy, which makes it mandatory for all telecoms to sell at least 20 per cent of their shares. 

In the statement, Airtel indicated that all successful applicants will have their SCD accounts credited with applied for, and incentive shares tomorrow (Tuesday, November 6), while unsuccessful applicants will be notified and their funds refunded within 14 days tomorrow. 
 
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