MTN Nigeria has fallen 10% to a five-week low of N171 after setting a retail offer price lower than its stock market price.
The telecommunication giant on Tuesday announced a public offer of 575 million shares at N169 per share with effect from December 1.
The offer closes on Dec. 14.
MTN listed its Nigerian business in Lagos two years ago at N90 each to become the second-largest stock by market capitalisation.
In March 2020, its shares fell back to the listing price due to lockdowns to slow the spread of coronavirus.
The drop in MTN, Nigeria’s second-biggest listed firm, pushed the main share index down 1.73%, a three-week low.
Nigeria has had few initial public offerings since the 2008 global financial crisis, which destroyed more than 60 per cent of the nation’s stock market value.
In the Tuesday announcement, the Chief Executive Officer, Karl Toriola, said that the “Retail Offer”, which is to be delivered via a digital platform is the first in Nigeria.
Toriola further explained that the technology MTN is using will allow Nigerian investors to participate as fully as possible.
According to him, the minimum subscription would be for 20 shares, and subsequent subscriptions would be multiples of 20 shares.
He added that it would include an incentive in the form of one free share for every 20 shares purchased.
“The offer includes an incentive in the form of one free share for every 20 shares purchased, subject to a maximum of 250 free shares per investor.
“The incentive is open to retail investors who buy and hold the shares allotted to them for at least 12 months, post the allotment date.
“The success and growth of MTN Nigeria is intrinsically linked to that of Nigeria and Nigerians,’’ he said.
However, Toriola said MTN needs to do a lot more to support the emergence of an inclusive digital economy.
He added that the company would continue to invest as it evolves into a true digital operator capable of integrating telecommunications, digital and Fintech segments seamlessly.
Ralph Mupita, President and CEO of MTN Group, said the offer was aligned with the company’s strategic priority to create shared value.
“In the last 20 years, we have worked diligently to connect 68 million subscribers onto voice and data networks and ensure that we deliver the benefits of modern connected life.
“With this Offer, we will contribute to further deepening Nigeria’s equity market.
“It is the first in a series of transactions as the MTN Group implements its plans to ensure broad-based ownership by reducing its shareholding in MTN Nigeria to 65 per cent over time,’’ he said.
Temi Popoola, the CEO of Nigerian Stock Exchange Limited, expressed optimism about MTN’s offer, saying there was no doubt the transaction would succeed.
Popoola said that this transaction would not have been possible without substantial human resources.
He noted three areas in which the transaction would benefit the capital market, which were: investor confidence, the number of investors exchanging in the capital market, and end-to-end digital transactions.
“One of the things that excite us about this is investors’ confidence. This will change the face of the capital market investment of the nation.
“For a long time we have spoken about the absence of retail in our capital market, particularly at the Exchange.
“We have spoken about the absence of certain demographic and geographic representation of Nigerians.
“This deal will address confidence, financial literacy and a lot of publicity that will come with this will drive this confidence.
“Part of our dream and hope is that this transaction will single-handedly change to multiples of what we have which is remarkable,’’’ he said.