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Retail Investors Adopt SPVs for Airtel’s N325.25b IPO

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  • Retail Investors Adopt SPVs for Airtel’s N325.25b IPO

Retail investors have opted for the use of special purpose vehicles (SPVs) to aggregate funds and buy into the ongoing initial public offering (IPO) by Airtel Africa Plc.

Airtel Africa Plc is raising up to N325.25 billion in a combined global and Nigerian IPOs. Airtel Africa, the parent company of Airtel Networks Limited, Nigeria’s second largest telecommunication company, plans to list its shares on the London Stock Exchange (LSE) and Nigerian Stock Exchange (NSE).

Airtel Africa, a subsidiary of India’s Bharti Airtel Limited, is offering between 501.13 million ordinary shares of $1 each and 716.41 million ordinary shares of $1 each at indicative price range of between N363 per share and N454 per share.

The IPO, being undertaken through a book building, is, however, restricted to qualified institutional investors and high net worth investors (HNIs). Under the rules in Nigeria, a high networth investor is defined as an individual with net worth of at least N300 million excluding automobiles, homes and furniture. This implies that only individuals and institutions with a minimum assessable investment of N300 million can participate directly in the IPO.

The IPO, which opened on June 18, 2019, is scheduled to close on Thursday June 27. The announcement of offer price, offer size, publication of the pricing statement and allotment of ordinary shares will hold on June 28, 2019. The allotment of ordinary shares and crediting of ordinary shares to the Central Securities Clearing System (CSCS) accounts of successful subscribers will take place on June 29 and July 3.

Airtel Africa is scheduled to be admitted to the official list and begin trading on the NSE on July 4. Already authorities at the NSE and Securities and Exchange Commission (SEC) have approved the listing of the resultant shares.

Checks indicated that investment houses have created SPVs which are aggregating subscriptions from retail investors. While the arrangements differ slightly, the investment firms appear to be using the same template for the SPVs, suggesting a sort of industry consensus on the approach to bypass the high net worth restriction.

Under the arrangements, the SPV will aggregate demand from retail investors and use its net worth to subscribe to the shares on behalf of the retail investors. Once successful and its account credited with the IPO shares, the investment firm will cross the shares into the CSCS accounts of the retail investors at the commencement of trading on the NSE.

The minimum share subscription by most SPV is 500 ordinary shares while the price is fixed at the ceiling of N454 per share, implying a minimum subscription of N227,000. Under the terms, the in-house allocation may be done on a pro-rata basis in the event of under allotment of the full subscription while the retail investors will bear all transfer charges. However, in the event that the clearing price is lower than N454, the excess amount will be refunded to the investors.

Experts who spoke on the SPVs said there was nothing legally wrong with the use of SPV to bypass the high net worth restriction, noting that the SPV is similar to collective investment by all the retail investors.

Nigerian market has substantial retail investors. Latest data from the NSE indicated that domestic retail investors accounted for 42 per cent of total domestic transactions at the Nigerian equities market. The five-month report ended May 31, 2019 showed retail investors led the market in two months.

SPVs are using attractive dividend policy to woo retail investors, who characteristically are usually excited by dividend-paying companies. Airtel Africa aims to distribute a minimum of 80 per cent of its consolidated free cash flow to its shareholders as cash dividend, subject to a ratio of net debt to underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between two times to 2.5 times being maintained. Dividend distribution is also subject to all regulatory, statutory and monetary restrictions.

The net proceeds from the IPO will be used to offset the company’s debt. The board of Airtel Africa said the IPO and the listing on the NSE would encourage operational discipline through the establishment of an independent capital structure and governance framework following the successful turnaround of the group’s operations.

According to the company, the IPO and listing would facilitate measurement of the group’s continued positive performance against holistic, publicly disclosed metrics as it enters a strong free cash flow phase.

The company is also expected to enter an optimal capital structure and enable improved leverage for greater flexibility in pursuing growth opportunities going forward while also having access to the capital markets and diversification of its capital base to support continued growth.

While the Nigerian offer shall be issued in Naira, Airtel Africa has avowed that the rights attaching to the shares allotted under the Nigerian offer shall be uniform in all respects and they will form a single class for all purposes, including with respect to voting and for all dividends and other distributions thereafter declared, made or paid on the ordinary share capital of the company.

According to the company, on a show of hands every holder of ordinary shares in the capital of the company who is present in person shall have one vote and on a poll every shareholder present in person or by proxy shall have one vote per ordinary share.

Airtel Africa added that except as provided by the rights and restrictions attached to any class of shares, shareholders will under general law be entitled to participate in any surplus assets in a winding up in proportion to their shareholdings.

“There are no restrictions on the free transferability of the Nigerian offer shares,” Airtel Africa stated, adding that no expenses will be charged by the company to any investor who purchases the Nigerian offer shares.

In its prospectus, Airtel Africa however cautioned that shareholders may be subject to exchange rate risk. According to the company, the investment by Nigerians may be subject to exchange rate risks.

“The ordinary shares are, and any dividends to be paid in respect of them will be, denominated in United States (US) dollars however the currency of issue is United Kingdom Pounds Sterling, for the Global Offer, and is naira, for the Nigerian Offer. An investment in the ordinary shares, by an investor whose principal currency is not US dollars, such as Nigerians, is exposed to foreign currency exchange rate risk. Thus, fluctuations in the exchange rate between Pounds Sterling and naira could materially and adversely affect the prices of the ordinary shares listed on the NSE. Any depreciation of US dollars in relation to the Naira currency will reduce the value of the investment in the ordinary shares or any dividends in foreign currency terms,” the company stated.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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333,000 Artisans: FG Commences One-Time Payment of N30,000

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FG Begins One-Time Payment of N30,000 to 333,000 Artisans

The Federal Government on Monday said it has commenced a one-time payment of N30,000 to 333,000 artisans under the Micro Small and Medium Enterprises (MSMEs) Survival Fund.

In a statement issued by Laolu Akande, the Senior Special Assistant to the President on Media and Publicity, Office of the Vice President, disbursements were being done to verified beneficiaries of the Artisan Support Scheme.

The statement read in part, “In the first stream of payments starting today, beneficiaries are being drawn from the FCT, Lagos, Ondo, Kaduna, Borno, Kano, Bauchi, Anambra, Abia, Rivers, Plateau and Delta States. They form the first batch of applications for the scheme submitted between October 1 and October 10.

“The MSMEs Survival Fund scheme is a component of the Nigerian Economic Sustainability Plan, NESP, which was developed by an Economic Sustainability Committee established by President Muhammadu Buhari in March 2020.

“The President asked his deputy, Vice President Yemi Osinbajo, SAN, to head the committee which produced and is overseeing the implementation of the plan. “Under the ESP, the Survival Fund is generally designed to among other things, support vulnerable MSMEs in meeting their different obligations and safeguard jobs in the sector.”

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Absorb Exited Npower Beneficiaries, N-power Youths Congress Tells FG

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Absorb Npower Beneficiaries of Batches A and B, N-power Youths Congress Tells FG

The N-power Youths Congress (NYC) has pleaded with the Federal Government to absorb the 500,000 exited Npower beneficiaries of Batches A and B and pay their outstanding allowances.

The National Coordinator, NYC, Comrade Joseph Enam Maga, stated this in Maiduguri during a press briefing held on Saturday at the NUJ Press Center.

He said thousands of exited beneficiaries are yet to be paid since the month of Match.

He, therefore, called on the Federal Government to offset all the outstanding allowances of Batches A and B and create a permanent job for them.

He said “It is a fact undisputable that thousands of beneficiaries have not been paid since the month of March.

“Promises upon promises have been made on this, but yet no positive result has been recorded. Sometimes I wonder what it takes for the data base manager of Npower to rectify this! Something that can be rectified in a couple of hours has lasted for seven good months now.

“Worst still, this is happening within this period of hunger and starvation because of Pandemic. We call on the minister of humanitarian affairs and disaster management to be human enough to respond to our request and give prompt attention to them.

“We equally wish to bring to the notice of Mr. President that Batch B Beneficiaries have not received their devices as was promised and signed at the commencement of the program.

“It is very sad that up to the disengagement of Batch A and B, nobody has come out openly to tell us what happened to our devices.

The coordinator paused to ask why are Nigerian youths being treated like nobody in their country? What have we done to be neglected like this?

“When the Humanitarian Minister was asked why we were disengaged at this critical time in historical epoch that corona virus is terrorizing the whole world, she responded that we were disengaged because it’s a two years programe that we signed.

“Then comes the question: why did Batch A stayed 4years? And if we signed for two years contract that warranted our disengagement, didn’t we equally signed to be given a device that would help us in our different places of primary assignment and equally increase of knowledge? Please we need answers ma. We need answers.

“We, the 500,000 batches A and B of Npower beneficiaries are calling on our government to respond to our demand. We don’t want to believe that it’s only a state of violence anarchy and doom will make a sane government to listen to her Youth’s grievances.

“Look at the Endsars protest for instance, after many lives have been lost and properties destroyed, our government decided to speak up. Niger delta militants were attended to when they resort to arms.

“The insurgents were given amnesty because of their terrorism. But we the innocent 500,000 graduates have been innocently complaining to our government but they paid deaf ears. We are law abiding citizens and we will continue to be law abiding citizens.

“We want Mr. President to understand that a hungry man is an angry man. We have really endured a lot. We need a quick response to our requests. We can’t be used and dumped like refuse. We refused to be used and dumped”, the National Coordinator added.

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Airtel Africa Appoints Ms. Kelly Bayer Rosmarin as a Non-Executive Director

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Ms. Kelly Bayer Rosmarin

Airtel Africa has appointed Ms. Kelly Bayer Rosmarin as a non-executive director, effective from 27 October 2020.

In a statement released on the Nigerian Stock Exchange’s website, the telecommunication giant said Ms. Bayer Rosmarin’s “appointment is by nomination of the controlling shareholder pursuant to the terms of relationship agreement dated 17 June 2019 between the Company, Bharti Airtel, Airtel Africa Mauritius Limited, the majority shareholder and an indirect subsidiary of Bharti Airtel, and Bharti Telecom. Ms. Bayer Rosmarin will replace Arthur Lang who will step down as a non-executive director on the same date.

“Ms. Bayer Rosmarin is currently CEO of Singtel Optus and Consumer Australia. She was previously with Commonwealth Bank of Australia, where she held several senior positions and varied portfolios, before being appointed as Group Executive of Institutional Banking and Markets. Ms Bayer Rosmarin is recognised for leveraging technology, data and analytics to develop leading customer services and experience. Ms. Bayer Rosmarin was named in the Top 10 Businesswomen in Australia and the Top 25 Women in Asia Pacific Finance and holds a variety of Board and advisory responsibilities.

“Ms. Bayer Rosmarin has, since February 2019, served as an Independent non-executive director on the Board of OpenPay, listed on the ASX. She will continue in that role. Openpay is a payments technology company based in Australia.”

Speaking on the change in the company’s director, Sunil Bharti Mittal, Chairman, Airtel, said: “On behalf of the Board, I would like to thank Arthur, who joined the Board in October 2018 and supported the company through its IPO, for his significant contribution to the success of our strategy to build Airtel Africa into a market leading mobile service provider and wish him well for the future.”

He further stated: “I am delighted that Kelly has agreed to join the Airtel Africa Board and we very much look forward to working closely with her”.

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