MTC struggles to make the connection

Nearly N$2.542 billion was raised through MTC’s IPO, about N$581.9 million less than the government’s target.

19 November 2021 | Economics

JO-MARÉ DUDDY

WINDHOEK

Despite pumping more than N$15 million into the broad-based marketing of its initial public offering (IPO), MTC battled to make the connection with ordinary Namibians and convince them to buy shares in the telecoms giant, which lists on the Namibian Stock Exchange (NSX) this morning.

State-owned Mobile Telecommunications Ltd offered 367.5 million ordinary shares at N$8.50 a share in its IPO, which opened on 20 September. However, when the IPO closed on 1 November, the public had only applied for just over 299 million ordinary shares. The results of the IPO were released on Wednesday on the NSX and JSE.

Government hoped it would raise about N$3.124 billion by offering the public 49% of MTC. Instead, the public – mostly institutional investors – was only interested in 39.9% of the SOE. Nearly N$2.542 billion was raised through the IPO, about N$581.9 million less than government’s target.

Institutional investors like pension funds, which are required by law to invest a portion of their assets under management locally, honoured their pre-commitment and applied for and received shares totalling around N$2.405 billion.

The IPO offered about N$719 million worth of shares to individuals. Although available at only N$8.50 a share, individuals had to subscribe for at least 200 shares, an investment of N$1 700. After that, shares were available in multiples of 100.

The IPO results showed Namibians only applied for and received shares totalling N$137.2 million. In comparison, ordinary Namibians subscribed for about N$244 million worth of Standard Bank Namibia Holdings’ shares in its IPO about two years ago. SBN Holdings’ IPO share price was N$8.90.

ECONOMIC MIRROR

Commenting yesterday, Cirrus Capital analyst Jaco Schoombie said the results of the MTC IPO reflects the state of Namibia’s recessionary economy and consumers’ predicament. It also shows that people think there are better shares and asset classes than MTC elsewhere, Schoombie said.

When MTC’s IPO opened, analysts like Cirrus warned that the company will likely face challenges to grow and increase its earnings in future and that this might deter potential investors.

Except for Letshego Holdings (Namibia), all major IPOs for the Local Index on the NSX in recent history – Bank Windhoek (now Capricorn Group), FNB Namibia (now FirstRand Namibia) and SBN Holdings – were substantially oversubscribed. This means that the public applied for more shares than the IPO offered.

Schoombie said Namibia’s regulatory environment played a huge role in the relative success of MTC’s IPO. Regulation 28 of the Pension Funds Act requires institutional institutions to invest at least 45% of their assets under management in Namibia.

“The regulation definitely help with this IPO. But in the longer term one doesn’t want to force institutions to invest in any economy or asset class. One wants them to be exposed to the best economy so that they can grow. Namibia is obviously struggling, so it’s a bit of a problem,” he said.

STATE COFFERS

When finance minister Iipumbu Shiimi announced the listing of MTC, he said half of the money raised would be used to finance Namibia’s budget deficit. At the time, government expected about N$3 billion from the listing, therefore earmarking some N$1.5 billion to help cover the estimated budget deficit of some N$16 billion in 2021/22.

The rest will be “ring-fenced for productive activities and be utilised in a manner that reaps long term benefits for the country”, according to Shiimi’s budget documents.

Schoombie said this probably means it was earmarked for the Sovereign Wealth Fund government intends to establish in the current fiscal year to help to help buffer Namibia against future economic shocks.

A smaller than expected raising through the MTC IPO means the fund will have to “fall in at the back of the line again”, he said.

Similar News

 

Trustco wants to dump NSX, JSE

2 days ago - 03 December 2021 | Economics

Jo-Maré Duddy – With a grim credit rating and a bloody nose from a South African financial tribunal, Trustco Group Holdings now wants to delist...

Don’t kick the cat!

2 days ago - 03 December 2021 | Economics

John Steytler Namibia is in an unenviable position as a developing country, its economy is very fragile and it is trying to weather the pandemic....

Bank of Namibia strategic plan launched

2 days ago - 03 December 2021 | Economics

PHILLEPUS UUSIKUThe Bank of Namibia (BoN) officially launched its strategic plan for 2022 to 2024 on Wednesday, following a six-month exercise led by the management...

Repo rate on par with South Africa at 3.75%

2 days ago - 03 December 2021 | Economics

PHILLEPUS UUSIKUIJG Securities expect the Bank of Namibia (BoN) to increase the repo rate at the next monetary policy announcement. The repo in Namibia and...

SA sets new unemployment record

2 days ago - 03 December 2021 | Economics

South Africa's unemployment rate rose again in the third quarter of 2021 to set a new record of 34.9 percent, the government statistics office StatSA...

Omicron renews SA debate on vaccines

2 days ago - 03 December 2021 | Economics

CLAIRE DOYENThe discovery of the Omicron variant of Covid-19 has pushed debate over mandatory vaccinations to the top of South Africa's agenda, as rising infections...

USA is the world's biggest plastic polluter

2 days ago - 03 December 2021 | Economics

The United States is by far the biggest contributor to global plastic waste in the world, according to a new report submitted to the federal...

An inclusive informal economy crucial

3 days ago - 02 December 2021 | Economics

PHILLEPUS UUSIKUThe informal sector in Namibia, which is regarded at the backbone of the economy, lacks formal recognition in policies, is unregulated and suffers from...

Omicron variant could outcompete Delta

3 days ago - 02 December 2021 | Economics

ALEXANDER WINNINGThe Omicron coronavirus variant detected in southern Africa could be the most likely candidate to displace the highly contagious Delta variant, the director of...

Trustco wants to delist from NSX, JSE

3 days ago - 01 December 2021 | Economics

Jo-Maré Duddy - Trustco Group Holdings has requested its shareholders to participate in a non-binding advisory vote to, among others, delist from the Johannesburg Stock...

Latest News

Hilia Hitula continues to achieve...

2 days ago - 03 December 2021 | Business

Rivaldo Kavanga Urban planner Hilia Hitula says it has always been a dream to work in the urban planning profession. “Right from matric...

Don’t kick the cat!

2 days ago - 03 December 2021 | Economics

John Steytler Namibia is in an unenviable position as a developing country, its economy is very fragile and it is trying to weather the pandemic....

Sheya slams SPYL for jealousy,...

2 days ago - 03 December 2021 | Politics

KENYA KAMBOWE RUNDUOusted Swapo Party Youth League (SPYL) secretary for economic affairs Marius...

Ya Nangoloh’s Swapo membership application...

2 days ago - 03 December 2021 | Politics

KENYA KAMBOWE RUNDU Swapo secretary-general (SG) Sophia Shaningwa this week wanted nothing to do with questions on a membership application...

V5 Digital a forerunner in...

2 days ago - 03 December 2021 | Technology

Iréne-Mari van der WaltMore than three years ago, Armin Wieland founded his business, V5 Digital, after noticing that there was a lack of companies in...

Do it with passion or...

2 days ago - 03 December 2021 | Justice

Desiree Gases Ngeendina Angula, born and raised in Greenwell, Windhoek, moved to Cape Town, South Africa, when she was 13 years old and lived there...

A love for engineering and...

2 days ago - 03 December 2021 | Transport

Wetumwene Shikage Describing her journey at Fly Namibia, Gabriela Kamaahene says the experience has been surreal. She says the company continuously grows and she...

EDITORIAL: Opportunity

2 days ago - 03 December 2021 | Opinion

With new Covid-19 infections doubling almost every day since the start of the week, and South Africa also seeing a surge, it’s difficult not to...

December rains on the way...

2 days ago - 03 December 2021 | Weather

ELLANIE SMIT WINDHOEK The Namibia Meteorological Service forecasts heavy rain for far northern...

Load More