Investors are optimistic of a fair price for Airtel Nigeria shares as the telecom company prepares to announce its share price and size today (Friday) ahead of its listing on the Nigerian Stock Exchange.
Capital market analysts also noted that investors were expectant that they would have an opportunity to invest in the telecom company.
Nigeria’s third largest telecom company had offered between 501.125 million and 716.406 million shares to Nigerians.
The company had also set a price range of N363 to N454 per share.
According to the company’s prospectus, the shares will start trading on the NSE on July 4 and the initial offer, which will be open to institutional investors and high net worth individuals only, would be issued through a book building process.
The Chief Executive, Chartered Institute of Stockbrokers, Mr Adedeji Ajadi, explained that the book-building process would give adequate information on the shares, which would be of benefit to the company and investors.
“The book-building will quicken the process of getting the relevant information about the shares. It helps the underwriters to also determine the price of the IPO,” he added.
Also, a capital market analyst, Mr Rotimi Fakayejo, said the process would allow the company to understand the value investors placed on the company and allow the telco to fix a price threshold.
“The company wants to size up ahead of time the success of the offer and what kind of valuation people are placing on the company. When they see different offers, they will look at a threshold whereby anyone below it will not be able to buy the shares. This is just to test the heartbeat of the market in terms of pricing and demand.”
Through the share listing on the Nigerian bourse and Airtel Africa IPO on the London Stock Exchange, the telco said it intended to use the net proceeds to reduce a debt of $750m and achieve a targeted leverage ratio of 2.5x, based on underlying EBITDA for the year ended March 31, 2019.
It highlighted other objectives of the issuance of ordinary shares as a way to the establishment of an independent capital structure and governance framework.
It named the issuing houses for the offer as Barclays Securities Nigeria and Quantum Zenith Securities Investments Limited.
Airtel said the application had been made to the NSE for the ordinary shares to be admitted to the official list of the Exchange.