Why MTN Nigeria Plc Is Avoiding IPO for Listing by Introduction in Nigeria

MTN Nigeria is arriving on the floors of the Nigerian Stock Exchange (NSE) via a special gbaam – listing by introduction and not through the typical IPO (initial public offer). Simply, the company will list already existing shares without any requirement to issue new ones or raise new funds. The company is largely ready – it has converted its name from a private entity into a public one. Today, it is called MTN Nigeria Communications Plc. I expect it to begin trading on the first day of Q3 which is July 1 2019. MTN Nigeria has gone through many challenges, and now it seems the end of the tunnel is close, for its moment of glory, especially for the customers who can move up as MTN moves up. Yes, I expect many to buy the shares and partake in the dividends.

MTN’s listing in Nigeria has been delayed by protracted disputes with the government: a 2016 dispute that led to a US$1.7 billion settlement and a 2018 dispute that led to a US$53 million settlement. The IPO was part of agreements reached with the Nigerian government as part of its US$1.7 billion settlement. In 2018, MTN successfully pulled off a mobile money IPO in Ghana through its mobile money service, Momo Wallet. It plans to launch a mobile money service in Nigeria this quarter. (TC Daily)

Differences Between IPO and Listing by Introduction

This website explains clearly: “Listing by introduction is one of the means by which a company can list its shares… An introduction is an application for listing of shares already in issue where no marketing arrangements are required. This is because the existing shares for which listing is sought are already of such an amount and so widely held that there would be an open market for the trading in these shares. Since only existing shares are listed by introduction, it follows that no new shares will be issued and no additional funds will be raised”.

Comparison between IPOs and Listings by Introduction:

	IPO	Listing by introduction
Raise new funds	?	X
Issue new shares	?	X
Listing of shares already in issuance	X	?

A listing by introduction is commonly in circumstances where:

• the shares of the company concerned have already been listed on another exchange; or

• the shares are being migrated from one exchange to another.

Looking at everything, I can conclude that MTN Nigeria is going public, not because it needs money from the Nigerian Stock Exchange investors, but simply to comply with the agreement it reached with the Nigerian regulators, as part of the settlement on its amalgam of fines. With that in its mind, it does not need to do any IPO – listing by introduction does it here. Period!

Yet, the good news – it will be listed on NSE. That is what matters.

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