July 4 - Afrikan Heroes

Airtel Africa Initiates IPO On The London Stock Exchange, Public Trading Still July 4

June 29, 2019

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.

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Preparing For July 4 Airtel IPO in Nigeria: Quick Facts You Need To Know

June 24, 2019

Airtel Africa Plc is preparing to list (IPO) on the Nigerian Stock Exchange and on the London Stock Exchange at the same time. This is another chance for investors in stocks or shares of companies to cash out big time.

Here Is The Timeline For The Nigerian Offer

Announcement of the offer price, offer size, the publication of the pricing statement and allocation of ordinary shares — 28 July 2019.
Allotment of new ordinary shares to the shareholders — 29-Jun-19
Crediting of ordinary shares to accounts — 3-Jul-19
Nigerian listing and start of unconditional dealings on the NSE — 4-Jul-19

The Amount Of Offer And Share Price

In a prospectus released by Airtel Africa Plc (“the Company”), the global Initial Public Offer ( IPO ) would put ordinary shares worth $750mn (or N270.0bn) out for public subscription.
Airtel Africa says the price for each of the shares is at a range of 80 pence and 100 pence/share or (£0.8-£1.0/share) for the London issue.
The Nigerian offer of the issue is opened at an offer price expected to be between N363 and N454/share (technically a naira conversion of the pounds sterling expected price per share) which will be followed with a secondary market listing on The Nigerian Stock Exchange (NSE).
The price range stated above (between N363 — N454/share) is indicative only and may change in the course of The Offer or be set within, above or below the price range.
The Company is expected to be admitted to the premium listing segment of the main board of the London Stock Exchange (LSE) at the end of the transaction.
Application has been made to the Nigerian SEC for the registration of all of the ordinary shares to be issued in connection with The Offer and to the council of the NSE, to be listed and admitted to the official trading list of the NSE.

Analysis of Airtel’s Intended IPO

The amount Airtel Africa intends to raise is $750mn. This is adding the London and the Nigerian IPO together. This offer is 14.0% and 18.9% of Airtel’s issued ordinary share capital, depending on the offer price.
Airtel, from their prospectus, would be allowing 10% of the issue to be ordinary. This is in accordance with the over-allotment option described in the company’s prospectus.
Airtel is looking at using the proceeds from the issue to reduce the level of their indebtedness on their balance sheet, particularly to achieve a targeted leverage ratio of 2.5x.
Airtel is being strategic about the Nigerian offering. It is planning that the Nigerian IPO (or ‘The Offer’) will be offered through a ‘book-building’ exercise pursuant to Rules 320 to 323 of the Nigerian SEC Rules, to determine the issue price and the level of demand. That is, the price may be readjusted according to the demand and response from the public about the offerings.
All ordinary shares subject to The Offer will be issued or sold at the offer price, which will be determined by the Company, following a book building process and in consultation with the Joint Global Co-ordinators.
From the prospectus, interested individual in the Nigerian offer will be deemed to have represented and agreed that it is either a ‘High Net Worth Investor (HNI)’ or a ‘Qualified Institutional Investor (QII)’ as such terms are defined in Rule 321 of the Nigerian SEC Rules.
Airtel may have to consider a number of factors in determining the Offer price, share size and the basis of allocation. This will include the level and nature of the demand for The Offer during the book-building process and prevailing market conditions. In simple terms, it is most likely the share prices will fluctuate.
From the prospectus, there are no restrictions on the free transferability of the Nigerian Offer Shares, meaning that prospective investors may buy and resell their shares at will. This is expected to lead to fluctuation in share prices. Most times, first to buy always win in this kind of situation.

Caveat

The Nigerian Offer is not underwritten, meaning that the consequences of the customer’s actions on the IPO day are not insured.
From the prospectus, it does appear that if UK Admission does not occur or unsuccessful, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. Temporary documents of title will not be issued. UK Admission shall not be conditional on Nigerian Admission, but the Nigerian Admission shall be conditional upon the UK Admission. There can be no assurance that Nigerian Admission will occur on the date indicated above or at all.

Issuing Houses

In relation to the Nigerian Offer and the listing on the NSE, Barclays Securities Nigeria Limited and Quantum Zenith Capital & Investments Limited have been appointed as Nigerian joint issuing houses. Greenwich Securities Limited and Chapel Hill Denham Advisory Limited have been appointed as Nigerian receiving agents.

Points To Have In Mind When Investing In Stocks of Companies

Own at least 10–30 different stocks, preferably in different industries: Don’t put all your money in one company/mutual fund/industry and invest in a wide variety of them.
Invest in established leaders in the industry, preferably companies in the top 25% or 30%: Choose great and stable companies. Remember: We’re investing in businesses, not gambling on racehorses.
The Company you’re buying should have a Long, Unbroken Record of Dividend Payments: If a company gives good dividends to their stockholders, it means it has actual earnings to pay it.
Choose companies with a 7-year Price-to-Earnings (P/E) Ratio of Less than 25 (and less than 20 in the past 12 months): Choose good companies with a moderately low P/E Ratio (less than 25).

Raghunath Mandava, MD and CEO, Africa, said: “Airtel Africa’s Gross Revenue grew by 11.2 percent on a YoY basis. Data traffic grew by 61 percent, voice minutes increased by 25 percent and Airtel Money throughput grew by 29 percent on a YoY basis.

NB: These points were postulated by Benjamin Graham, author of the classic “The Intelligent Investor

Additionally,

Set a minimum limit of the amount you can invest in companies.
Invest in companies that are making profit or has all the metrics to make profit.