MTN in the money seat with IHS Towers stake as the IPO is set at $21 per share

MTN IS IN the money seat as its 29 percent stake in IHS Towers is set to rake in billions, after it announced yesterday that the pricing had been set for the initial public offering (IPO) at $21 (R312) per share, which an analyst said was “was a good offering, but probably under-priced to attract investors”.

Nigerian-based tower operator IHS Towers placed an IPO of 18 million ordinary shares at a public offering price of $21 per share on the New York Stock Exchange, which would raise $378 million.

After the IPO, MTN will hold 85 176 719 ordinary shares from IHS Towers.

MTN last month alerted the market to the upcoming IPO, punted as Africa’s biggest IPO.

MTN said yesterday that the underwriters of the offering would also have a 30-day option to purchase up to an additional 2.7 million ordinary shares from IHS Towers at the IPO price, less the underwriting discount.

The closing of the offering was expected to occur on Monday, October 18, subject to satisfaction of customary closing conditions.

IHS Towers, which was founded by Sam Darwish in Lagos, Nigeria, in 2011, has 30 207 towers in its existing portfolio.

It is focused on building and managing mobile telecommunications infrastructure for mobile network operators.

IHS Towers boasts a 365 million mobile subscriber base at its nine markets, including Brazil and Nigeria.

It is one of the world’s largest independent owners of mobile infrastructure and is reportedly the largest operator of wireless towers in Africa, Europe and the Middle East by tower count.

Rand Swiss portfolio manager Viv Govender said the R26.3bn IPO was a good offering, but probably underpriced to attract investors and shore up the share price in the coming weeks.

Govender said this might sacrifice a bit of value in terms of how much the company gets from the shares it sells, but this was a “common practice” in the markets.

“With the IPO usually the price starts lower because you are not selling every share, you are not selling the entire stake, you are taking a small piece out there to get a market price of what you hold,” Govender said.

“This is a good IPO valuation, but you will probably see it rise quite significantly in the next couple of days.

“It’s probably a bit underplaying the value of this holding, but it’s normal practice among these IPOs. You want to get a feel good spike up after a couple of days or first weeks of trading.

“You are probably going to see the shares go up a little bit, indicating that it was probably underpriced at R26bn.”

The news yesterday comes hot on the heels of MTN announcing this week that MTN Uganda had set the price of its IPO for the sale of a 20 percent stake at 200 Ugandan shillings (R0.83) per share, as the East African nation’s biggest telecoms operator launched the country’s biggest IPO.

MTN’s share closed 1.37 percent lower on the JSE yesterday at R138.93.