MTN’s record Ghana IPO is seen drawing Africa-focused funds

Wednesday, March 28, 2018

By Moses Mozart Dzawu

A record wave of stock is heading for Ghana’s market as MTN Group Ltd. is said to prepare to sell a chunk of its local unit to investors for about $790 million. The shares should be snapped up, the country’s second-largest money manager said.

The numbers are striking: the planned listing would be more than 10 times bigger than the country’s largest initial public offering to date. Even so, demand from foreign investors attracted by MTN’s profitability should ensure the IPO is a success, said Alex Boahen, head of research at Databank Group.

“The offer will generate a lot of global interest,” Boahen said by phone from the capital, Accra. “If you see the numbers, it’s a very profitable company. MTN has a dominant market position and a lot of investors will like to get a piece of the fast-growing telecom sector.”

MTN’s Ghana unit increased the target for its IPO by more than a half to 3.48 billion cedis ($788 million), people familiar with the matter told Bloomberg last week. The listing of a 35% stake is a step toward fulfilling conditions MTN agreed to with the government in 2015 when the Johannesburg-based company won the right to use fourth-generation spectrum, a high-speed mobile data service for customers.

Boahen said he expects foreign companies and funds with emerging-market or pan-African strategies to buy the bulk of the MTN shares. Local private pension funds and other institutional investors may also take big positions. Although individual Ghanaians would be keen to pick up some of the stock, their lack of available cash will probably mean they will mostly miss out, he said.

Photo courtesy of Simone McCourtie.

Source: Moneyweb (link opens in a new window)

Finance, Investing
fintech, telecommunications