EFCC operatives visit MTN office, quiz management
The Economic and Financial Crimes Commission (EFCC), yesterday, stormed the Falomo office of telecommunications firm, MTN.The raid, according to information gathered by The Guardian, was not unconnected to the recently share listing of MTN on the Nigerian Stock Exchange (NSE).
Claims of manipulations, irregularities and scarcity have been linked to the share listing since it debuted on the NSE on May 16. The South African telecommunications firm had listed by introduction, 20.4 billion ordinary shares at N90 on the NSE, a par value N0.02.The listing of MTN Nigeria was the most anticipated and biggest on the floor of the exchange, as the Nigerian stock market rebounded.
Though, there no official confirmation from MTN as at press time about the EFCC visit, but an insider told The Guardian that the EFCC came around 4pm, met with the management and went away with some documents after some deliberations.According the source, the visit “may have had to do with our recent share listing. They asked MTN to list, we have listed, now they are disturbing us. I don’t know how we are going to attract investments in the face of intimidation and unrest.
“The EFCC came this afternoon, met with the management and I think they went with some documents.” When The Guardian called the EFCC spokesperson, Tony Orilade, he denied knowledge of the purpose of the visit, simply saying: “If an EFCC official had issues with his network provider, is that an issue. But I think he can visit to complain. But if you are talking about listing, I am not aware.”
Since the listing, there have been reports of scarcity of the shares and alleged manipulation, with stockbrokers decrying the inability of retail investors not having access to the shares on the floor of the NSE. Boniface Okezie, a representative of minority shareholders was reported to have said: “Shareholders are not happy, because we could not buy their shares; it was not available and we don’t share in all the excitement going around.”
The capital market regulators have also been accused of conniving with MTN Nigeria Plc to allegedly manipulate the performance of the telecom firm’s share price at the exchange.Specifically, they argued that by allowing MTN a free float of only 5.542 million shares admitted for trading at N90/share worth N498 million when it listed by way of introduction on the NSE, rather than unbundling all the units of shares in its holding, the managers may have unwittingly created a scarcity situation in the market.
But the NSE has absolved itself of any wrongdoing, saying in an email response to The Guardian that MTN met the stipulated requirements for listing.Head, Listings Regulation, NSE, Godstime Iwenekhai, explained: “The total number of MTN shares in the hands of over 700 Nigerians, who are not promoters, controlling interests, directors, etc that were unbundled upon listing is about 1.8 billion. When you convert this at the listing price of N90 per share, this translates to about N162billion, which is over the N40billion free float requirements for companies on the Premium Board.”
He further clarified that the free float refers to “the portion of shares of a company that are in the hands of public investors as opposed to locked-in stock held by promoters, controlling-interest investors or governments.”The apex regulator- the Securities and Exchange Commission (SEC)- when contact on the anomaly, did not offer any new response on the development, but rather referred the public to an initial statement made on MTN listing, which said: “The Securities and Exchange Commission, SEC can confirm that the application by MTN Nigeria to register their existing securities has been approved.
According to acting Director General of SEC, Ms. Mary Uduk: “MTN sought to come to the market by way of an introduction and they wrote to the SEC last week requesting for approval to register its existing shares. That approval has now been granted.”
Notwithstanding the NSE’s response, analysts believe that because MTN investors lost value because of the Central Bank of Nigeria (CBN) fine last year, this listing by introduction is designed to create a “value recovery” situation for them and pave the way for them to sell off their shares, after driving the price to the desired level.
Specifically, the Chief Research Officer, Investdata Consulting Limited, Ambrose Omodion, said: “Yes, the regulators claim to be protecting retail investors or encouraging their participation in this market are just paying lips service, because the shareholding structure of MTN Nigeria that holds the 23.92 per cent are institutional and high net-worth individual investors that are using the exchange to enrich themselves at the expense of retail investors that also want to be part-owners of the company.
“The 20 per cent minimum free float is one of the listing requirements, but it seems to be a post-listing requirement, since these companies are listed and given date to meet the minimum free float.“With the tight holding structure and small float of MTN Nigeria, the existing shareholders of the company are making it difficult for new shareholders to buy. The high demand is currently causing problem at the exchange because local potential shareholders would definitely buy the shares at a very high rate.
“As we speak, seven banks had approved N200 billion loan facilities for MTN, which is not bad, depending on what the company wants to achieve with that loan, coming two days after the listing. Does it mean that becoming a quoted company in Nigeria is one of the conditions to grant the facility? The urgent and speed at which the regulators approved the listing was something else.”
Consequently, market operators also accused MTN Nigeria of deviating from its initial plan to encourage Nigerians to partake in their wealth creation process through the listing, as no single unit has been made available to stockbrokers to sell to their clients, who have been looking forward to investing in the MTN shares.