Airtel Uganda Limited struggled to sell half of the shares on offer in its initial public offering (IPO) as investors preferred to buy the government’s high-yielding bond.
In a report by Bloomberg on Tuesday, the telecom firm, owned by Sunil Bharti Mittal, chairman of Bharti Airtel Worldwide, said it managed to raise $56 million after selling 54.5 percent of the 8 billion shares on offer.
The firm added that retail investors bought just 0.3 percent of the IPO as shares were unchanged at 100 shillings on its debut on Tuesday.
Government bonds in the East African country yield as much as 15 percent.
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Speaking on the development in Kampala, Paul Bwiso, chief executive officer (CEO) of Uganda’s Securities Commission, said investors may have opted for less risky government securities while disregarding the future value of the stock.
“It comes down to financial literacy, understanding the asset classes,” Bwiso said.
“If I buy Airtel today, can I in two years consistently get a dividend like I would get an interest return from my fixed deposit from my market fund or treasury bonds?”
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Commenting on the shares in a statement, David Birungi, Airtel Uganda spokesperson, said the IPO was successful because it was meant to pay existing shareholders and the company has already made capital investment.
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