Airtel Africa has opened it’s much awaited Initial Public Offering, IPO, on the Nigeria Stock Exchange and the London Stock Exchange Nigeria, by way of book building, targeting to raise $646.8 million (N232 billion)
The parent company of Airtel Nigeria Limited, which is the third largest telecommunications company in Nigeria by subscriber base, had announced a few weeks ago, that it is planning a dual listing of its stock on the Nigerian and London Stock Exchanges respectively.
Book building is the process by which an underwriter attempts to determine the price at which an IPO will be offered. An underwriter, normally an investment bank, builds a book by inviting institutional investors (fund managers et al.) to submit bids for the number of shares and the price(s) they would be willing to pay for them.
Book building is a method that allows investors to determine the target price. Airtel Africa stated that the offer would be priced in pence and naira with the price ranging from 80 pence/N363 to 100 pence/N454 per ordinary share while the procedure of the offer is estimated at $646 million or N232 billion (at N360/$).
Airtel had also stated clearly that it has institutional investors as its target buyers.
According to Reuters, the book runner, said it had received indications of interest worth about $200 million from pre-IPO investors, adding it had further investor orders of $100 million.
“The offer consists of an institutional offer only. Ordinary Shares will be offered pursuant to the Global Offer (a) to certain institutional investors in the United Kingdom and elsewhere outside the United States in reliance on Regulation S, (b) in the United States only to those reasonably believed to be Qualified Institutional Buyers, QIBs in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and pursuant to the Nigerian Offer (c) in Nigeria to Qualified Institutional Investors and High Net Worth Investors as defined in Rule 321 of the Nigerian Securities and Exchange Commission, SEC Rules pursuant to a book building process (the “Nigerian Offer”)” the prospectus stated.
According to the prospectus of the offer, Airtel stated that Nigeria represents the Group’s largest single country subscriber base, comprising 37.6 percent of the Group’s total subscribers as at 31 March 2019, with 43.4 percent of subscribers in East Africa and the remaining 19.1 percent in the Group’s Rest of Africa segment.
In the year ended 31st March 2019, revenue in Nigeria was $1.1 billion (representing 35.9 percent of the Group’s revenue in the year) and the underlying Earnings Before Interest Tax Depreciation and Amortisation, (EBITDA) was $550 million.
In Nigeria, revenue attributable to mobile voice services in the year ended 31st March 2019 was $739.8 million.
The prospectus stated that the company wants to raise money so it can use it to pay down some of its crushing debts.
Airtel reported revenues of $3 billion for the year ended March 2019 compared to $2.9 billion the year before. The company also reported a profit of $450 million in 2019.
Airtel posted losses of $134 million and $769 million in 2016 and 2017 respectively.
The offer closes June 28 and allotment of new ordinary shares to the shareholders begins June 29, 2019, while the crediting of ordinary shares to accounts start July 3, 2019.
The Nigerian admission and start of unconditional dealings on the Nigerian Stock Exchange, NSE is expected from July 4, 2019.