Airtel, a telecom company, has decided to extend the period for its initial public offering (IPO) by 14 days. This means that the IPO, which was originally set to close today, will now conclude on October 27, 2023. The reason for this extension is an increase in subscriptions, just one day before the scheduled closure date.
While there were reports that the IPO had not reached its intended subscription target, this information could not be independently confirmed by Monitor. However, David Birungi, the Public Relations Manager for Airtel, stated that the decision to extend the offer period was made due to a surge in retail investor interest in the last few days of the IPO. The Capital Markets Authority (CMA) had already approved this extension.
CMA declined to provide further details about the extension. In August, Airtel had offered eight billion shares at a price of Shs100 each. According to anonymous analysts, the extension might be attributed to market conditions. Airtel had launched its IPO during a period of sluggish market activity, worsened by inflation and a weakening currency.
This IPO came after a one-year delay, during which Airtel had requested an extension due to unfavorable economic circumstances. Airtel is the 10th local company to fulfill licensing conditions under the National Broadband Policy, which requires telecoms to sell a 20 percent stake to Ugandans.
Currently, the Uganda Securities Exchange (USE) has nine local listings, including MTN, the first telecom to list in 2021, and eight cross-listings. USE rules mandate that after the offer, at least 20 percent of shares should be held by no fewer than 500 shareholders, excluding company employees and directors.
It remains uncertain whether Airtel has met this requirement, but analysts believe that the IPO has experienced limited activity due to inadequate awareness, compounded by a volatile economic climate leading to stock value declines from IPO prices.
Several other IPOs have also seen their share prices drop, with Cipla’s falling from Shs256.5 to Shs65 and MTN’s decreasing from Shs200 to Shs170. Despite these challenges, Airtel has expressed confidence in its performance and a 95 percent dividend policy as attractive factors for potential investors.