Airtel Uganda recorded a subscription of only 54.45% to its initial public offering of IPO. The IPO was difficult, despite a favorable arrangement for investors and a good performance of the Ugandan stock market.
Airtel Uganda announced on Monday, November 6, a subscription of only 54.45% of its initial public offering (IPO), offering 8 billion shares at 100 Ugandan shillings each. The share sale, launched on August 29, aimed to sell up to 20% of the company, but only 4.36 billion shares were actually subscribed for.
The Ugandan National Social Security Fund (NSSF) marked this event by expressing the wish to acquire at least 10.55% of Airtel, thus representing more than half of the shares offered, for an investment of 199 billion shillings ( 52.8 million USD).
Despite various strategies deployed to attract investors, Airtel has not had the expected success, in the same wake as the local subsidiary of MTN. The latter had only obtained subscriptions for 64.7% of its available shares, despite a generous dividend policy and an affordable share price.
This result questions the capacity of African financial markets to support certain IPOs. Airtel, like MTN Uganda, was seeking to respond to regulatory requirements requiring the opening of the capital of telecom companies to local investors.
However, this regulation seems not to have considered the limited depth of a financial market which struggles to attract both national and international investors. The postponement of the closing of the offer also did not seem to be enough to attract more people interested in the operation.
Although the Ugandan financial market is not among the most liquid, it offers respectable returns. In 2023, it has recorded an overall capital gain of 7.5% since the start of the year. Additionally, the overall net profit of listed companies has increased 2.6 times since October 2021, reaching 1.2 trillion Ugandan shillings (about $320 million) for the same period in 2023, according to data accessed by the Ecofin Agency.