Airtel Africa has had its Initial Public Offering ( IPO ) in both London and Nigeria, but the real IPO, in which the general public may be able to buy Airtel’s shares begins from the 4th of July, 2019. Right now, it appears, Airtel Africa is selling to investors below what they were initially priced, on the London Stock Exchange.
Airtel’s stocks on the London Stock Exchange fell as much as 15 percent to 68p after Africa’s second-largest mobile operator listed on the London Stock Exchange, knocking £500m off its opening valuation to give it a market capitalization of around £2.6bn.
Here Are The Facts
- The IPO is for institutional investors and high net worth individuals only
- The general public may be able to deal in Airtel’s shares by July 4.
- For the IPO, Airtel is backed by SoftBank an issuing house and had priced its initial offering at 80p per share, but this poor IPO in London saw the company perform below what it secured in two recent private funding rounds.
- The African subsidiary of Indian telecoms giant Bharti Airtel had priced its shares at 80p, at the bottom of its previously announced 80–100p price range.
- This means that its current valuation now stands at around £3.1bn (NGN 1.4 trillion or $3.9 billion). This is already significantly below the valuations implied by earlier funding rounds.
- Airtel Africa secured $1.25bn from a consortium of investors including private equity house Warburg Pincus, Singapore’s Temasek, SoftBank and Singapore Telecommunications at a valuation of around $4.4bn, in October last year.
- A $200m investment by the Qatar Investment Authority earlier this year put its valuation closer to $5bn.
- From the combined Nigerian and London IPO, Airtel Africa — which operates a telecoms and mobile money business across 14 African countries — raised £595m.
- The whole of the shares issued in the IPO represented 19 percent of Airtel’s total stock.
“This is a proud moment for the team that has built Airtel Africa into the second-largest mobile operator in Africa. We are now the first telecom company to simultaneously list on the Premium segment of the London Stock Exchange and Nigerian Stock Exchange through an IPO.”
Airtel’s IPO is For Institutional Investors. Ordinary Nigerians and the General Public Can Begin To Trade In Airtel’s Shares By July 4 On Both The London And The Nigerian Stock Exchanges
“The offer consists of an institutional offer only. Ordinary Shares will be offered pursuant to the Global Offer (a) to certain institutional investors in the United Kingdom and elsewhere outside the United States in reliance on Regulation S, (b) in the United States only to those reasonably believed to be Qualified Institutional Buyers, QIBs in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and pursuant to the Nigerian Offer © in Nigeria to Qualified Institutional Investors and High Net Worth Investors as defined in Rule 321 of the Nigerian Securities and Exchange Commission, SEC Rules pursuant to a book building process (the “Nigerian Offer”)” the prospectus stated.
Why The Nigerian Stock Exchange and Not The Johannesburg Stock Exchange, Which Is The Largest In Africa, Was Chosen For The African Listing
According to the prospectus of the offer, Nigeria represents the Airtel’s largest single country subscriber base, comprising 37.6 percent of the Group’s total subscribers as at 31 March 2019, with 43.4 percent of subscribers in East Africa and the remaining 19.1 percent in the Group’s Rest of Africa segment.
In the year ended 31st March 2019, revenue in Nigeria was $1.1 billion (representing 35.9 percent of the Group’s revenue in the year) and the underlying Earnings Before Interest Tax Depreciation and Amortisation, EBITDA was $550 million.
In Nigeria, revenue attributable to mobile voice services in the year ended 31st March 2019 was $739.8 million
The prospectus said the company wants to raise money so it can use it to pay down some of its crushing debts.
Why Airtel’s Shares Are Worthy Of Public Subscription
Airtel reported revenues of $3 billion for the year ended March 2019 compared to $2.9 billion the year before.
The company also reported a profit of $450 million in 2019.
Airtel posted losses of $134 million and $769 million in 2016 and 2017 respectively.
Timelines For The Offer
The offer closes June 28 and allotment of new ordinary shares to the shareholders begins June 29, 2019, while the crediting of ordinary shares to accounts start July 3, 2019.
The Nigerian admission and start of unconditional dealings on the Nigerian Stock Exchange, NSE is expected from July 4, 2019
Click here to download and read Airtel Africa ’s IPO prospectus.
Here is a list of stock brokerage firms in Nigeria through which you may be able to purchase or sell shares on the Nigerian Stock Exchange.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.