MTN lists shares on stock exchange tomorrow

As MTN will officially be listed on the Ghana Stock Exchange (GSE) tomorrow after a successful public floatation, there are serious concerns that trading in the shares could hit a snag.

This is because only 10.6 per cent of the shares are in the hands of individuals while institutional investors own 89.4 per cent, which is a chunk of the 33 per cent of share ownership.

Majority of the shareholders in terms of value, who contributed GH¢1.026 billion of the GH¢1.15 billion total shares sold, are institutional investors who are unlikely to sell but hold their shares in portfolios until an opportune time to sell them off.

Given that the retail holding is minimal, an investment banker with Databank, Mr Courage Boti, told the GRAPHIC BUSINESS that trade of the shares, when it commences tomorrow, might be negligible.

As a result, he said the anticipated capital gains for investors would be improbable due to the minimal trading expected on the shares.

“Liquidity in that share may be an issue so it might not trade every day on the market, and what should have been translated into capital gains for the investors probably may not happen as everybody is anticipating because there will be less trading in the shares,” he explained.

Investor participation

Although 127,653 retail investors participated in the offer, they contributed GH¢121.05 million, a mere 10.6 per cent of the total amount realised from the Initial Public Offer (IPO).

Mr Boti said such composition of ownership would not encourage the desired trading activities on the shares as anticipated.

“That is why I wished that the holding structure would have been a bit more retail investors than institutional investors,” he said.

Also, the shares may not see enough trading activities because all subscribers of the offer were given the opportunity to buy their desired shares before the IPO closed, considering that only 33 per cent of the offer was bought.

“They offered so many shares and only 33 per cent of it was taken, so it’s not like some people applied and were denied and would look for opportunity on the secondary market, so trading may be suspect and once it’s not trading, you don’t expect price movements,” Mr Boti said.

Historic listing

The historic GH¢1.15 billion realised from 128,152 applicants would be the biggest in terms of value and volume in the history of the GSE.

By all standards, the result of the IPO released officially on August 30 portrays its success. The amount raised was three times the minimum amount required by the Security and Exchange Commission (SEC) for the offer to be declared successful.

MTN set out on May 29 this year to raise some GH¢3.4 billion from the stock market, but ended up with only GH¢1.15 billion, which was still in excess of the 10 per cent success rate of the targeted amount.

Given that an IPO is not supposed to raise the full amount targeted because it is dependent on demand and supply dynamics, the amount realised is a record on the local market.

Foreign participation

The shares offered were 35 per cent of the firm which had over 17.83 million subscribers with a market share of approximately 55.09 per cent as of December 2017.

In total, there were 128,152 applicants for shares, of which 127,826 were Ghanaians who contributed GH¢ 443.6 million, making MTN the company with the largest number of Ghanaian shareholders listed on the GSE.

However, the 326 non-Ghanaian applicants contributed GH¢703 million, representing 61.31 per cent of the total amount realised.

The domination of foreign investors in terms of value could contribute to further depreciation of the cedi when these foreign investors begin repatriation of profit.

At a press briefing on August 30 to announce the results, the Chief Executive Officer (CEO) of MTN, Mr Selorm Adadevor, said all successful applicants would be allotted all the shares they applied for by 5 p.m. today.

“Applicants with Central Securities Depository (CSD) accounts will have their accounts credited with their allotment by September 4, 2018 by 5 p.m.

“IC Securities will create CSD accounts for successful applicants who did not provide details of their CSD accounts as part of their application, and their respective allotments will be credited to the respective CSD accounts created for them,” he stated. — GB