Some stakeholders in the capital market have faulted the listing of MTN Nigeria Communications Plc on the nation’s bourse in spite of unavailability of the mandatory 20 per cent free float.
The market operators told the News Agency of Nigeria on Monday in Lagos that the price of MTN Nigeria shares would continue to skyrocket due to their scarcity at the detriment of retail shareholders.
The stakeholders blamed the Nigerian Stock Exchange (NSE) for approving the company’s listing without the mandatory free float.
Free float or public float refers to the shares of a company that can be publicly traded and are not restricted. In other words, the term is used to describe the number of shares available to the public for trading in the secondary market. Free float for companies listed under NSE Premium Board is 20 per cent.
The Chief Operating Officer, Invest Data Ltd, Ambrose Omordion, expressed disappointment at the development, saying that the listing was at the expense of retail shareholders.
Omordion urged that market regulators should be committed to the protection of retail investors to encourage their participation in the market.
He claimed that the shareholding structure of MTN Nigeria showed that the 23.92 per cent said to be floating, were held by institutional and individual high net worth investors.
According to him, the investors are using the exchange to enrich themselves at the expense of retail investors who want to be part owners of the company.
“The 20 per cent minimum free float is one of the listing requirements, but it seems to be a post listing requirement since companies are listed and given time to meet the minimum free float.
“The companies that got listed recently apart from MTN Nigeria that failed to meet the requirements are Global Spectrum, Notore Chemical,” Omordion noted.
He said that the existing shareholders of MTN Nigeria were making it difficult for new shareholders to buy due to the tight holding structure and small float. Omordion claimed that the high demand was currently causing problem at the exchange.
He said that the Securities and Exchange Commission (SEC), NSE and brokers would benefit from the situation, leaving potential local shareholders to buy the shares at a high rate.
The Founder of Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, described the listing as dissatisfactory.
“Our conclusion as shareholders is that they have come to play us a game which is not far from a fraudulent game; the nominal value of MTN shares is not certain.
“These are areas SEC should ask NSE questions rather than the issue of gift sharing at AGMs and ban of pre-AGMs.
“Up until now, no prospective shareholder can tell you this is what MTN Nigeria stands for,” Nwosu said.
He said that the exchange set a bad precedence in the market by allowing some companies to list without meeting the free float requirement.
“There have been very bad precedents recently in the market; Dangote Cement and some other companies were given preferential treatment.
“Whenever any company wants to come for listing by introduction, that free float which they have agreed with, must be open and for the investing public.
“Let everyone scramble and get from that, and not a situation where you will be listed by introduction and the shares are not available,” Nwosu said.
The ISAN Publicity Secretary, Moses Igbrude, described the listing as a welcome development, but urged the management of exchange to ensure compliance with the minimum free float by all listed companies in the market.
“If the requirement is not met, there will be artificial scarcity of the company’s shares, making new investors to buy at high price which is not supposed to be.
“The exchange managers should not allow such behaviour because it can erode investors’ confidence in the market.
“They must be seen to be transparent as well as treat all companies equally,” Igbrude said.
MTN Nigeria on May 16, listed a total of 20.35 billion shares at N90 per share. The stock at the first trading day rose by nine naira or 10 per cent to close at N99 per share.
It increased on the second trading day by 10 per cent to close at N108.90 per share.
The shareholding structure of MTN Nigeria shows that the controlling entity is MTN International Ltd, which owns 15,485,544,050, representing 76.08 per cent of the shares.
On the other hand, the non-controlling entities in the telecommunications company include: Stanbic IBTC Asset Management Ltd with 1,962,349, 050 (9.64 per cent), Chief Victor Odili, 806,886,900 (3.96 per cent) and Mobile Telephone Network N.I.C.B.V with 559,720,150 (2.75 per cent).
Others are: Government Employees Pension Fund (represented by Public Investment Corporation SOC Ltd., 355,281,650 units (1.75 per cent) and Mr Pascal Dozie with 340,409,900 units (1.67 per cent).
Other non-controlling entities are: Mr Sani Mohammed Bello, 265,092,150 (1.30 per cent); Mr Babatunde Folawiyo, 218,815,100 (1.08 per cent); Mr Gbenga Oyebode with 181,776,250 units (0.89 per cent).
The others are Malam Ahmed Dasuki with 177,717,850 units (0.87 per cent) and Mr Karl Toriola with 920,000 units (0.005 per cent).