The National Social Security Fund (NSSF) has expressed its intention to invest UGX 199 billion (Ugandan Shillings) to acquire a 10.55% stake in Airtel Uganda as part of the company’s initial public offering (IPO). This investment opportunity is part of a promotional strategy where institutional investors can purchase shares at a price of UGX 47, while retail investors pay UGX 71 per share.
The NSSF’s decision to invest in Airtel is seen as a significant move that allows millions of its members to become partial owners of a successful company in the rapidly growing telecommunications sector, which is known for its innovative services. This joint decision was announced in a statement by NSSF Managing Director Patrick Ayota and Airtel Chief Manoj Murali.
While the NSSF’s investment is substantial, it could have been higher, potentially reaching UGX 300 billion. However, Airtel has chosen to offer attractive incentives to institutional investors, recognizing their long-term commitment and stake in the company.
Airtel, in preparation for its scheduled listing on the Uganda Securities Exchange on November 7, is actively seeking institutional investors to support the sale of 8 billion shares, which represents 20% of its total equity, to the general public. The company has faced challenges attracting large investors, crucial for any business looking to list on the Uganda stock exchange, as retail investors have been deterred by economic constraints and market volatility.
To address this issue, Airtel extended the IPO deadline to October 27 and increased share incentives to entice more Ugandan investors. Each Airtel share is being offered at a face value of UGX 100.
As part of its license requirements, Airtel must allocate 20% of its stake to Ugandan investors, making it the second telecom company to be listed on the Ugandan stock exchange after MTN in 2021.
The NSSF, as the largest institutional investor in listed companies on the Uganda Securities Exchange, has negotiated a substantial 53% discount for its investment. However, it appears that the NSSF’s offer falls short of Airtel’s expectations, despite the fund being a major investor in the telecom sector. In 2021, prior to MTN Uganda’s listing, NSSF invested UGX 350 billion in the company, becoming its second-largest shareholder and significantly contributing to the subscription goals of MTN Uganda.
Financial market experts have noted that although Airtel has been working closely with NSSF to revive its IPO, the pension fund has been cautious due to past experiences with companies like Safaricom, Uganda Clays, and New Vision Publishing Company.