The proposed Initial Public Offering (IPO) of MTN Nigeria will be another litmus test for the Securities and Exchange Commission (SEC) particularly with respect to the time it will take the apex capital market regulator to approve the Offer.
Before now, many issuers had cause to complain about lengthy “time-to-market” in Nigeria and emphasised its negative impact on companies’ appetite to raise money from the capital market.
In a recent promise, which many market watchers sees as regulatory rhetoric, the SEC said the MTN IPO will receive exceptional attention that could result to the Issuer getting approval for the Offer with 72hours upon filing “complete documents”.
The Securities and Exchange Commission on July 8, 2018 said that neither MTN Nigeria Limited nor any of its advisers or representatives has filed any application with the SEC regarding the said IPO.
This is contrary to what sources familiar with the matter tell BusinessDay.
“MTN Nigeria Limited to the best of the Commission’s knowledge is a Private company limited by shares. Given that there is no application from MTN before the Commission, there could not have been a request by MTN or any of its representatives or advisers requiring any form of regulatory review,” SEC said.
BusinessDay asked Mary Uduk, acting Director General, SEC the length of time it would take the Commission to approve MTN IPO in case the company decides to file for the IPO application today, she simple said: “Let MTN file first and the day they say they have filed, watch us and count it. I would make an exception.”
The SEC assured that “I will open the Commission to the press. Let them (MTN) file and leave the heat for the Commission”.
MTN Group said its Nigerian business will be listed on the Nigerian Stock Exchange (NSE) this year by way of Initial Public Offering (IPO). MTN agreed to list the Nigerian unit on the Lagos Bourse as part of a June 2016 agreement to pay a $1 billion fine for missing a deadline to disconnect unregistered subscribers amid a security crackdown.
Since then, many analysts established compelling investment case for MTN Nigeria, considering the company’s impressive track record which is supported by scaled market position and the first-mover advantage. This is in addition to the Telco’s new growth initiatives being implemented by a sound management team –which could potentially propel earnings to new highs over the medium term.
One major impact from the listing of MTN Nigeria is that it will significantly dilute the dominance of the banking and cement sectors on the Nigerian bourse and give investors more options, which is important for the stock market, according to research analysts.
The MTN Group had in show of commitment to move ahead with the 2018 target, appointed Chapel Hill Denham as lead manager for the initial public offering (IPO). Other appointed advisers are South Africa’s Rand Merchant Bank, Renaissance Capital and Vetiva Capital. The telecoms firm is also working with Stanbic IBTC Capital, Standard Bank of South Africa, Standard Advisory London and Citigroup Global Markets, as joint advisors and global coordinators, with Stanbic acting as lead issuer.
“Public filing and getting a response depends on the quality of information they are sending as well. If the information is complete as required, then they would get a response. Within 48 hours when you file, whether your documentation is complete or not, you would surely get a response”, the SEC said.
Uduk said the SEC desires to review capital raising application at the shortest possible time. “Between 48hours and 72 hours we want to be able to give approval. There are also other factors that we have to consider to do that. For example, MTN filing today, when you are filing, there are documents that you should file along with the main application which is the prospectus and they are issues within the commission you should also look at across other institutions, stakeholders.”
The listing of MTN on the Nigerian bourse makes the stock market become more reflective of the broader economy with telecoms contribution of over 10percent to Nigeria’s GDP. The Group had obtained its shareholders’ approval in principle to prepare for the listing, including amendments to its corporate structure. A renowned lawyer and boardroom expert, Gbenga Oyebode had been appointed chairman of board committee on MTN floatation.
SEC acting DG continued saying, “If they MTN are supposed to file like six (6) documents and they file three (3), it is not complete. It is those underlined documents that will enable you to review the main documents. You have to ask them to complete their document to complete the filing. When you open the document and find a lot of misstatement or information that you need clarifications on, you have to ask so that you don’t mislead investors. Those are the kind of issues that makes us not to be able to give you specific timeframe within which an application can be reviewed.”
SEC said it has been working with a various stakeholders including the Association of Issuing Houses of Nigeria (AIHN) to shorten time to market.
Sonnie Ayere, president, Association of Issuing Houses of Nigeria said “When a company wants to raise money it either goes to a bank or come to the capital market. The true issue has always been time-to-market. And once this problem has been solved, it becomes less for the issuer”. Ayere who is the founder and CEO of Dunn Loren Merrifield Group confirmed that the problem holding back most prospective issuers in Nigeria today is time-to-market.
“There is a law that says that all securities must be approved by the Commission. Once you file an application to raise capital and the programme has been registered, there is no need to come back to SEC but because what we do is that it is each series that is been approved, that is why we often have to come back to SEC,” he said.
Iheanyi Nwachukwu & Cynthia Ikwuetoghu
