On October 27, 2023, the National Social Security Fund (NSSF) of Uganda announced its intention to invest Shs199 billion in Airtel Uganda’s initial public offering (IPO), in a bid to acquire 10.55% of the telecom company’s 8 billion shares. This move comes on the deadline day for Airtel’s IPO and aims to boost the company’s prospects amidst challenging circumstances.
A joint statement from NSSF Managing Director Patrick Ayota and Airtel’s Chief, Manoj Murali, highlighted that the investment provides an opportunity for millions of NSSF members to become partial owners of a successful company operating in a fast-growing and innovative sector.
However, Airtel’s desperate need for institutional investors and a slow response from retail investors has led the company to extend its IPO deadline and offer significant incentives. Retail investors face a Shs71 price per share, while institutional investors are currently benefiting from a promotional price of Shs47.
Airtel’s aim is to offer 8 billion shares, representing 20% of its total equity, to the public. Meeting this goal requires attracting substantial institutional investment, as the company has struggled to gain the interest of retail investors due to low economic power and market volatilities.
Airtel’s license requirements mandate the sale of 20% of its stake to Ugandan investors. The company’s IPO will mark the second telecom listing on the Uganda Securities Exchange (USE) after MTN’s successful listing in 2021.
Despite the NSSF’s reputation as the largest institutional investor in USE-listed companies, its Shs199 billion commitment appears to be less than Airtel had initially anticipated. Although the NSSF has been offered a generous 53% discount, this decision might not align with Airtel’s expectations.
In the past, the NSSF invested Shs350 billion in MTN Uganda prior to its 2021 listing, making it the second-largest shareholder and contributing significantly to MTN’s subscription goals. However, the NSSF’s cautious approach may be attributed to past experiences with Safaricom, Uganda Clays, and New Vision Publishing Company.
The telecom company’s IPO is navigating a challenging path, with an extended deadline and institutional investors playing a pivotal role in shaping its future.
