Shares of Celtel Zambia, which recently had Zambia’s biggest IPO (initial public offering), are set to start trading next week.
The IPO for Celtel Zambia, the country’s largest mobile phone operator, closed on May 20, and officials say it was oversubscribed.
The market flotation will come on the heels of a similar move by Safaricom in Kenya, whose IPO was also oversubscribed, and which will launch shares on the market June 9.
Twenty percent of Celtel Zambia was offered to the public and investors through appointed agents. The price for shares was 640 kwacha (US$0.19). The stock will start trading June 11 on the LuSE (Lusaka Stock Exchange), and fluctuate in price according to demand.
Because there was more demand than allocated shares, allotment letters and refunds will issued by Pangaea Renaissance Securities, the joint lead manager and sponsoring broker, on or around June 10.
“The selling shareholder will provide preference in the allotment process to the Zambian Public and Zambian institutional investors,” said Pangaea Director Ceaser Siwale. But Siwale also noted that the selling shareholder reserves the right to accept applications, either in whole or in part, or to accept some applications in full and other in part, or reject or all applications in such manner as it may determine.
Celtel Zambia is in the Celtel International group. The primary idea for the IPO was to afford the Zambian public, Celtel Zambia employees and selected financial institutions the opportunity to participate directly in the growth of Celtel Zambia, according to Siwale. Also, there has been a need to enhance the public image, profile, investor and general awareness of Celtel Zambia and to encourage wider ownership of Celtel Zambia shares in general to support the development of the Zambian capital market, Siwale said.
Siwale said that Celtel operating as a cash business and the common practice of Zambains buying airtime may explain the interest in Celtel Zambia’s IPO.
Meanwhile, business analyst Chibamba Kanyama said it was wrong for Celtel to offer shares to the foreign institutional investors when it was clear from the outset that the Celtel shares would have a high demand locally.
“There were lessons from the Kenya offer recently where the issue was oversubscribed and it shows the appetite that mobile phone equities attract around the globe,” said Kanyama. He said Celtel should have closed the offer for foreign investors so that they could have only participated in the secondary market.
“Now that it looks likely shares will be oversubscribed, the best allocation principle should be towards individual local investors first,” Kanyama said.
Kanyama said the Celtel shares should go to individual local investors who have made Celtel successful in Zambia and the local institutional investors such as insurance companies and pension funds. He said the reason that these investors were holding funds on behalf of thousands of individual local investors.
“It implies that the individual investors who are not directly participating in Celtel will still have an opportunity to gain from the Celtel offer via Institutional investors. Should the institutional investors prove to have such a huge fund, then there should be allotments; meaning the institutional investors should not get all they are asking for. They can be refunded a portion and allowed to buy for small amounts say, K5 billion each,” explained Kanyama.
Dickson Jere, who purchased Celtel shares, said receiving a refund was a normal when someone applies for the IPO, especially if there was an over subscription.
Celtel International is a subsidiary of Zain, the trading name of Mobile Telecommunications Co., the fourth largest mobile telecommunications operator worldwide by geographic footprint. The company is a leading mobile telecommunications provider in the Middle East and Africa, operating in 22 countries with more than 47.5 million customers.
