Airtel Uganda Tuesday listed 4.36 billion shares on the Uganda Securities Exchange (USE) after attracting 4,614 investors in its initial public offering (IPO), which saw the takeover of 54.45 percent of the offered eight billion shares.
The listing has attracted the most retail investors (4,600) of any listing on the local bourse, despite the fact that they’ve long shown a lackluster interest in local company offerings due to deficient sensitization and limited resources to have substantial stakes in listing firms.
Airtel was able to increase the participation by doubling shares for both ordinary Ugandans and institutions during the offering.
However, this is quite low compared to 7,000 people that opened Securities Central Depository (SCD) accounts during the IPO that started on August 30, 2023.
In comparison to previous public offerings, retail investors have increased from 2,800 when Cipla Quality Chemicals Limited was listed in 2018.
The incentive shares Airtel issued during the IPO required retail investors to pay Shs47 for each share unlike the previous set share price of Shs100, which increased share take-up, giving the shareholders a future effective return on investment of just under 11 percent.
“You wonder why people did not look at this as a potential return on investment because it’s quite competitive with the money markets and the trust funds. I think it’s about knowledge and understanding of the capital markets and how companies operate. It needs a lot of much financial literacy [to make more people owning shares in public companies]” said Paul Bwiso, the chief executive officer of USE.
According to the telecom’s chairman, Hannington Karuhanga, the Shs211 billion raised from the share sale will be used to fund capital expenditure and operating infrastructure that will help the company be more competitive in the market.
This listing now values Uganda's total market capitalization at Shs11 trillion, or 6 percent of the country's GDP and will make it the second telecom to go public after MTN Uganda in 2021.
Telecom companies are fulfilling requirements in their new licenses that mandates them to list 20 percent of their stake to Ugandans.
“Airtel’s listing will definitely project our market to be attractive to many foreign investors who currently dominate the trading of Uganda’s listed companies (60 pc) to make it more competitive and liquid,” said Mr Bwiso.
The telecom company expects to pay a total dividend of approximately Shs500 billion for the financial year ending December 31, 2023, comprised of quarterly payments, according to its prospectus.