Airtel Africa, a subsidiary of Bharti Airtel, on Friday said that it has priced 80 pence (NGN 363) per share in its initial public offering. Based on the offer price, the market capitalisation of the company will be around £3.1 billion (NGN 1.4 trillion or $3.9 billion) upon completion of the offer (including the over-allotment option).

However , according to a Bloomberg report, the stock plunged in London trading, making it among the worst debuts on the European exchanges this year. Airtel Africa dropped as much as 16 per cent to 67 pence a share, matching the first-day decline for OssDsign AB last month.

The stock was trading at 71.4 pence as of 9.41 am (local time).

Bharti Airtel in February last year had announced the intention for an IPO for the African unit to reduce its net debt of around $4 billion by issuing the new shares.

‘Strong support’

Commenting on the result of the IPO, Sunil Bharti Mittal, Chairman of Airtel Africa, said, “The strong support we have received from institutional investors demonstrates the attractive investment proposition Airtel Africa offers the market. Since first investing in Africa almost nine years ago, we have leveraged our expertise in emerging markets to deliver on a clearly defined strategy to build Airtel Africa into a market-leading mobile service provider, increasingly expanding beyond voice into data services and Airtel Money.”

Airtel Africa is a leading provider of telecommunications and mobile money services, with presence in 14 countries, primarily in East Africa and Central and West Africa. Airtel Africa serves a large and fast-growing addressable market, with attractive mobile data and mobile money growth prospects as non-voice revenue remains lower than other geographies.

Secondary listing

The offer was oversubscribed with strong interest from a variety of reputed global investors across the UK, the US, Africa, Europe, West Asia and Asia. It also came with a secondary listing on the Nigeria Stock Exchange with meaningful allocations to Nigerian investors.

Immediately, following UK Admission and Nigerian Admission, the company will have a free float in excess of 25 per cent, as certain of the pre-IPO investors’ holdings will also constitute free float.

“We are now the first telecom company to simultaneously list on the premium segment of the London Stock Exchange and Nigerian Stock Exchange through an IPO,” Raghunath Mandava, Chief Executive Officer of Airtel Africa, said.

Bloomberg adds: The weak market showing for the African carrier, the continent’s second-largest by subscribers, comes as parent Bharti Airtel struggles back home with a year-long price war and mounting debt. Proceeds from the IPO will help the India-based wireless operator pare debt just as it also needs funds to upgrade its mobile network to fifth-generation technology.

“Airtel Africa may be suffering from broader investor unease about telecom carriers in emerging markets,” said Ally McKinnon, a fund manager at Scottish Investment Trust Plc who didn’t participate in the IPO.