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Airtel Africa shares fell sharply on Wednesday, a day after its debut $4.4 billion flotation in Lagos, mirroring a similar decline on the London stock market where the telecoms firm has its primary listing.
Airtel dropped 10% in early trade on Wednesday, hitting a low of 359.40 naira against an initial public offering price of 363 naira.
The telecoms company, owned by India’s Bharti Airtel, listed in Lagos on Tuesday in an offering that made it the third-largest company on the exchange by market value behind main rival MTN Nigeria and Dangote Cement.A total of 373,238 orders had been placed for the stock by 10:46 GMT against thin demand. The shares, which listed at 363 naira, closed 10% higher at 399.30 naira on Tuesday after 100,000 shares traded.
Analysts at Meristem Securities said Airtel stock could be mirroring its performance on the London stock market where it dropped as much as 15% the day after it listed in London on June 28.
India’s Bharti Airtel offered shares in its African unit via an IPO two weeks ago with a flotation in London and a secondary listing in Nigeria, its biggest market in Africa.
The listing comes after its rival, South Africa’s MTN, floated its Nigerian unit in Lagos in May in a $6.5 billion listing that made it the second-largest stock on the bourse by market value.
Meristem analysts said MTN Nigeria had been trading over-the-counter before its listing in May unlike Airtel but added that a tax dispute with the Nigerian government may have dented MTN’s valuation.
MTN has said it would sell more shares once the tax issue is resolved and that Airtel’s listing valuation provides a comparable for MTN Nigeria which has a return on equity of 93% as against Airtel Africa’s 50%.
Nigerian equities dropped to a seven-week low on Tuesday just before the Airtel listing which helped the stock market recoup losses. The main index, however, continued its downward trend on Wednesday to fall 0.86% by 10:46 GMT.
Stocks have been held back by low growth in Africa’s biggest economy as well as the president’s failure to appoint a cabinet months after winning a second term. Local stocks have fallen 6.7% this year and 17.8% last year.
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