Why retail investors could not buy MTN shares after listing – Analysts

Analysts have given reasons why retail investors could not
access the shares of MTN Nigeria on the floor of the Nigerian Stock
Exchange (NSE), following its listing last week.

The listing of MTN Nigeria was the most anticipated and biggest
on the floor of the exchange last week as the Nigerian stock market
rebounded.

This followed the listing by introduction of 20.4 billion shares
of MTN Nigeria shares at N90 a share and a par value N0.02.

Also, within two trading sessions, its share price gained 20% to
lift the local bourse marginally out of red territory. The overall
market performance measure, NSE ASI, closed northwards at 28,871.93
points, having gained 153 basis points w-o-w.

Analysts at Coronation Research have suggested that this week,
they expect the local equities market to close marginally in green
territory as the euphoria of the listing of the telecoms giant is
likely to be sustained. “More so, we expect investors to take
advantage of the general low share prices in the market,” they
said.

But soon after the close of business on Thursday and Friday,
retails shareholders have started expressing frustration at their
inability to access the shares on the floor of the exchange.

Boniface Okezie, a representative of Minority shareholders told
Daily Trust that: “shareholders are not happy because we could not
buy their shares; it was not available and we don’t share in all
the excitement going around.”

According to Coronation Merchant Bank, no capital is being
raised from the listing.

“This is because MTN‘s existing shareholders have not made any
commitment to sell off some of their shareholdings. Consequently,
no liquidity should be expected from this process. It can best be
said that the company is basically doing this out of obligation,”
it said.

According to the Nigerian Stock Exchange, there are about five
different ways to list a company’s shares on the Nigerian
bourse.

The most popular one is through Initial Public Offering, which
basically avails the investing public the opportunity to subscribe
to a company’s shares. Two things are involved when shares are
listed through an IPO, namely: an offer for subscription and an
offer for sale.

Listing by introduction, on the other hand, has to do with the
listing of a company’s shares without an Initial Public
Offering.

According to the NSE, “your company’s shares are listed without
a prior IPO; the company would usually have raised capital prior to
applying to list, and also must meet the listing requirements –
including a minimum number of public shareholders (300 to list on
the main board; 51 to list on the ASEM) and minimum public float
(20% for the main board; 15% for ASEM).”

Explaining the delay in the IPO, the Chief Finance Officer of
MTN Nigeria, Adekunle Awobodu said: “We had wanted to do the IPO
last year but some circumstances hindered it, those circumstances
are still there, as the situation improves and market conditions
permit, we will have the IPO.”

The head of research at FSDH, Ayodele Akinwunmi, said:
“Sincerely, I think it may be difficult for people to get the
shares of MTN to buy in the next few weeks or days because of the
huge interest in it and the shares and the fact that the current
shareholders may not want to sell.

“We are also of the view that some investors will sell down on
other highly capitalised stocks like GTB, Zenith Bank, Dangote
Cement with a view to buy MTN.

“This sell down will create investment opportunities in these
companies. So instead of running after MTN at the moment, savvy
investors should think of positioning in the aforementioned
stocks.”

It would be recalled that MTN Nigeria has had issues with
regulatory agencies with a case against the Attorney General of the
Federation, Abubakar Malami, still pending while N55billion is due
to be paid in Q2 2019 to the telecom regulatory body, the Nigerian
Communication Commission (NCC) as the last tranche of the
N330billion fine that was agreed in 2016 for non-disconnection of
unregistered lines.

Subscribe ToNairalaw News!