Confusion as MTN Nigeria listing angers traders, stockbrokers

MTN

There are palpable levels of anger and dismay expressed by various segments of the investing public as regards the MTN Nigeria listing by introduction on the Nigerian Stock Exchange.

Apart from an unexpected scarcity of sellers for the stock, its price has gone up by more than 20% since the company listed last Thursday.

The sharp rise in the share price of the company despite limited numbers of sell transactions has fueled anger and speculations that sharp practices might be behind the entire listing by an introduction by the company.

While some quarters are accusing MTN Nigeria and its existing shareholders of using the listing to prop up the share price of the company to a higher level which will then allow the company to execute an initial public offering, IPO, that will see the company’s share price sold to members of the public at higher price.

Others are of the opinion that MTN Nigeria is not disposed to an IPO and the company is only ‘fulfilling all righteousness’.

Despite not wanting to go on an IPO, MTN Nigeria announced last week that it plans to borrow about $555 million via loans and bonds to finance its expansion plans. Many analysts were confused about the plan to borrow a syndicated loan despite the obvious opportunity of raising such funds via an IPO. People with the knowledge of the matter hinted that MTN is not willing the dilute its ownership, the more reason it is not selling its shares or going on IPO

While MTN has not officially responded to the myriads of criticisms, there are fillers the company would release some shares to allay fears and waves of anger in the investing community.

To calm tensed nerves, the NSE said in a statement shared earlier today that

“Our attention has been drawn to a few critical issues raised in various print and social media platforms regarding the listing of MTN Nigeria Communications Plc (MTN Nigeria) on the Premium Board of the Exchange.

As an Exchange that is committed to operating a fair, orderly and transparent market, we deem it important to clarify these issues. 

MTNNG listed by Introduction. Where a company lists following an Initial Public Offering, shares are expected to be available for trading on the day of listing. In a Listing by Introduction, however, no shares have been offered for subscription by the company prior to listing.

Thus, without any intervention, it is possible that there will be no shares available for trading on the listing date. Indeed, currently, no rule of The Exchange compels shareholders in a listed company to tender their shares for trading.

Shareholders are at liberty to trade their shares at any time and price suitable to them. Thus, in order to stimulate trading in the shares of companies that List by Introduction, the NSE’s practice is to urge the company to make shares available on the day of listing.

In the case of MTN Nigeria, the NSE had requested the Company as part of the listing process to make shares available and The Exchange expects the company to do that.”

Many people within the investing community regard the NSE’s statement as vague and lacking in sanction to MTN. As it stands, it is the prerogative of MTN Nigeria and its shareholders to decide what they sell or decide not to sell.

MTN Nigeria is Nigeria’s largest mobile carrier with over 60 million subscribers in its last disclosure.