The public sale of Airtel’s shares through an initial public offering (IPO) faced challenges until the National Social Security Fund (NSSF) intervened at the last minute. Initially priced at Shs90 per share, Airtel’s IPO struggled to attract interest from the public. The NSSF stepped in, purchasing 93 percent of the shares that were bought, investing Shs199 billion.
Despite the lower-than-expected price, analysts believe the stock’s value may remain stable as NSSF now holds the majority of the shares. If the Fund were to sell the shares at the current market price of Shs100, it would double its investment. Additionally, NSSF could recoup 26 percent of its investment next month through Airtel’s dividend pay-out for the financial year ending December 31.
NSSF’s move to invest in Airtel’s IPO aligns with its strategy to diversify its portfolio, mixing assets for robust investments. The Fund’s recent financial statements highlight dividend income as a growing revenue source, reaching Shs145.12 billion in June 2023. However, some analysts caution about the potential risks associated with equity investments, as seen in NSSF’s unrealized losses in previous IPOs, notably Cipla Uganda.
The intervention raises questions about the dynamics between public offerings, institutional investors, and the regulatory framework. Airtel’s struggle to meet the Capital Markets Authority’s requirement of 20 percent public purchase underscores the challenges faced by companies in attracting public interest in IPOs.