MTN’s $787m IPO to boost local investment market

Business News of Saturday, 24 March 2018



CEO of MTN Ghana, Ebenezer Twum Asante

Investment analysts are hopeful of a boost in investments on the stock market with MTN’s 787 million dollars Initial Public Offer (IPO).

In their view, the telecom company’s presence should attract more investors and grow the access to funds.

The comments follow MTN’s announcement of reviewing upwards, its target for the IPO.

The telecom operator has reviewed its target for the offer from an estimated 500 million dollars to 787 million dollars, according to a report by Bloomberg.

MTN in its latest disclosure to Bloomberg, says it is seeking to raise some 787 million dollars, equivalent to about 3.5 billion cedis.

The IPO is to allow the telecom company to cede about 35 percent of its stake in Ghana, to the public.

This is also in fulfillment of the conditions associated with the acquisition of the 4G spectrum in 2015.

Explaining the benefits of the transaction to the stock market, an Associate, Equity Trading at UMB Stockbrokers, Kofi Busia Kyei said it will be necessary to attract more investments.

“MTN is one of the many companies that the stock market is looking forward to having it on the bourse considering the volume and the size of the transaction, we are looking up to shareholders benefitting from the payment of dividends and attracting a lot of investors unto the market.”

If successful, MTN’s IPO will be the biggest volume traded on the Ghana Stock Exchange so far.

It will be ten times more than the current biggest volume of 326 million cedis adb raised when it launched its IPO in 2016.

Responding to questions on the possible reasons accounting for the decision to increase the target by that margin, Investment Banker, Mahama Iddrisu suggested some possible factors as;

“Either that MTN has adjusted the use of their proceeds, or the shareholders are ready to part away with a larger chunk of the company because MTN has been in operation for a very long time. In addition, it could be because they are hopeful of raising the needed money either through local or foreign participation.”

There have been calls for MTN to open up its offering to non Ghanaians so as to attract a wide number of investors.

Kofi Busia Kyei maintains this is necessary to address the repatriation of profits at the expense of the country.

The telecom company is expecting to raise its IPO by the end of June this year.

The transaction is also expected to be conducted by IC Securities.

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