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Airtel Africa IPO bombs, opens at 77 pence on debut to join ranks of LSE flops

BusinessToday.In     June 28, 2019

Airtel Africa fell sharply on its Friday debut after the stock opened at 77 pence (at a loss of 3.75%)on the London Stock Exchange, against the listing price of 80 pence/share.

After the tepid opening, Airtel Africa spiralled downwards and fell as much as 16% to 67 pence per share at a volume of 33.54 lakh traded shares on LSE platform.

Airtel Africa has joined the ranks of companies which have not performed as per expectations during their debut on the LSE. Three prominent initial public offerings (IPOs) on London's main market, Amigo Holdings, Funding Circle Holdings and car maker Aston Martin Lagonda Global Holdings PLC, opened lower than their offer prices despite much fanfare at the time of their floats.

Earlier, Airtel Africa announced the successful pricing of its IPO at 80 pence/share. The telecom company had set a price range of 80 to 100 pence per share for its IPO on the London Stock Exchange.

"The price range for the offer has been set at 80 pence to 100 pence per ordinary share, implying a market capitalisation on admission of between 3,007 million and 3,623 million pounds (approximately USD 3,788 million-4,565 million)," Airtel Africa said in filing to the London Stock Exchange.

According to the objectives listed in the prospectus, IPO listing in London was done by the telecom giant in order to help the subsidiary derive better value and enable the parent company in India to lower its debt. The company plans to utilise this fund to lower debt of its Africa unit which stands at around $5 billion.

Earlier this month, Airtel Africa also announced its newly constituted Board of Directors that includes representatives from Bharti Airtel and the investors."The new Board of Directors brings a wealth of industry and governance experience to further drive the Airtel Africa business," Airtel said.

In a regulatory filing, the company said that it will sell nearly 595.2 million-744 million shares in the offering to raise up to 595 million pounds (approximately USD 750 million), including an over allotment option.

"10 per cent of the offer (100 per cent: primary) is expected to be made available pursuant to the over-allotment option... Excluding the over-allotment option, the offer is expected to comprise approximately 541.1 million-676.4 million new shares to be issued by the company to raise gross proceeds of approximately 541 million pounds (approximately USD 682 million)," the filing said.

As on March 31, 2019 Airtel Africa had 99 million customers across three regions-Nigeria, East Africa and rest of Africa. Bharti Airtel's Africa arm had reported a net profit of USD 83 million during the quarter ended March 31, 2019, as compared to a net loss of USD 49 million a year ago.

Edited by Rupa Burman Roy

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