Investors bought only 64 percent of the shares in the deeply discounted initial public offering (IPO) by MTN Uganda, a statement from the company showed.
The telecom sought to raise US$245 million from the sale of 4.47 billion shares as part of the Uganda government’s push to spur local ownership in the industry.
The IPO, which was opened to East African investors –from Uganda, Kenya, Tanzania, Rwanda, and Burundi.
At least 2.9 billion shares were allotted out of the 4.5 billion shares that were offered, Kampala-based MTN Uganda said in a statement, without providing reasons for the under subscription
Kenya’s National Social Security Fund (NSSF) bought 39.1 million shares in the Ugandan unit of South African-owned MTN for a 0.18 stake, securing a sixth-place among the top ten shareholders.
To motivate investors, the telco offered free shares of between five and 10 units for every 100 units allocated. It required applications for the purchase of at least 1.1 billion shares.
The incentive shares are rare for an IPO in the regional market and signaled MTN’s determination to ensure the offer was successful.
The IPO had been tipped to be Uganda’s biggest ever and seen as a major boost to its stock market, a small bourse with 40,000 investors trading just 17 stocks.
The shares will start trading on the Nairobi Securities Exchange (NSE) on December 6, 2021.
Kenyan investment bank Dyer and Blair was the lead retail broker for the MTN IPO.
The stake which Africa’s largest wireless carrier has in the unit was cut to 83.05% from 96% following the allotment.
The South African-based group had offered to cut its stake by 20% in line with regulatory requirements.
Uganda and Kenya’s national social security funds, Duet Africa Opportunities Master Fund IC, EFG Hermes Oman LLC, First Rand Bank, and local pension funds for the Ugandan central bank and tax authority were among the top buyers of stakes in MTN Uganda, according to the statement.
The IPO, the first in the country in more than three years, is also the biggest since Umeme raised about US$66 million in 2012, according to data compiled by Bloomberg.