Nigerians eager to buy into the much talked about success of the telecommunications giant MTN via an IPO would have to wait still further as the application now being considered by Nigeria’s securities and exchange commission, SEC is for the mere introduction of existing MTN shares held by Nigerians BusinessDay has learnt.
According to our investigation, MTN is not seeking to raise funds at this stage and does not aim to create any new shares by way of an IPO while the $2bn case of unpaid taxes against the Attorney General lingers on, sources told BusinessDay.
It was reported last Friday that MTN has applied to Nigeria’s SEC to list its shares on the stock exchange after the company successfully converted to a PLC last month.
The acting Director General of the securities and exchanges commission, May Uduk acknowledged to BusinessDay Monday morning that SEC had received an application from MTN for the registration of “its existing shares” but that this does not amount to an offer to create new shares.
“MTN is seeking to come to the market by way of an introduction and has asked SEC for an approval to register its existing shares. This is not a complicated process at all and if the documentation submitted by MTN is complete SEC should be able to grant approval for this application within 24-48 hours”, the SEC Director General told BusinessDay.
A Lagos High court is expected to rule tomorrow on a preliminary objection filed by Nigeria’s attorney general against the case brought by MTN challenging claims of unpaid taxes of about $2bn filed against the telecommunications firm by the Nigerian government.
Analysts say for as long as such a significant claim remains unresolved, it could become a material element in the valuation of MTN before an IPO and that is explains why MTN is not going for an IPO at this time. When a company comes to the exchange by way of an introduction, its shares can only be traded if existing shareholders sell whereas in the case of an IPO, the company is bound to offer a certain amount of its shares for sale through a public offer for sale.
