International Courant
Final week, Airtel Uganda, the nation’s second largest telecommunications firm, needed to promote greater than half of its shares to the Nationwide Social Safety Fund (NSSF) throughout its preliminary public providing (IPO). This occurred after they failed to draw sufficient traders.
The IPO, which closed on October 27, 2023, was Uganda’s largest ever. It provided 8 billion shares of 100 shillings every, valuing the corporate at Shs4 trillion. Nonetheless, the market response was lukewarm. As of October 26, solely 3.2 billion shares had been subscribed by the general public.
On the final minute, NSSF stepped in and purchased 4.8 billion shares. This equates to 50% of the IPO shares and 10% of the corporate’s complete fairness. NSSF is a statutory physique accountable for managing the retirement financial savings of personal sector staff in Uganda. They’ve greater than 2.5 million members and belongings value greater than 15 trillion shillings. NSSF’s resolution to put money into Airtel Uganda was based mostly on the corporate’s sturdy monetary efficiency and progress prospects. Additionally they thought of the potential for dividend earnings and capital progress.
Airtel Uganda is a subsidiary of Airtel Africa, a number one supplier of cellular providers in 14 African nations. They’ve been lively in Uganda for greater than 25 years. With 14.3 million lively subscribers, they account for 47.3% of the market share. For the yr ended December 31, 2024, the corporate reported revenues of shillings 1.6 trillion, earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) of shillings 888 billion and web revenue of shillings 326 billion. The corporate additionally has the quickest and most in depth 4G community within the nation, protecting greater than 90% of the inhabitants.
Regardless of these spectacular numbers, Airtel Uganda confronted a number of challenges in attracting traders for its IPO. One in all these was the unfavorable funding local weather in Uganda. This was characterised by excessive inflation, excessive rates of interest, low home financial savings, weak capital markets and political uncertainty.
Inflation in Uganda averaged 3.5% in FY23 however peaked at 10.7% in October 2022 as a result of meals worth shocks and forex depreciation. Rates of interest remained excessive all year long. The central financial institution’s coverage fee stood at 10% for many of FY23, whereas business financial institution rates of interest averaged over 20%. Home financial savings have been low: round 13% of GDP, in comparison with the regional common of 17%.
Capital markets are additionally underdeveloped, with solely eighteen listed firms and low buying and selling volumes on the Uganda Securities Trade (USE). Moreover, political uncertainty forward of the February 2024 common election could have deterred some traders from placing their cash in the direction of long-term investments.
The publish that Uganda’s largest ever IPO was poorly acquired first appeared on Ventures Africa.
Uganda’s largest ever IPO was poorly acquired
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