Investors appeared to be willing to pay more than the 10 per cent daily premium on the share price of MTN Nigeria Communications Plc. While the share price of the telecommunications company rose again by 10 per cent at the weekend to N108.90 at the open market at Nigerian Stock Exchange (NSE), investors went into off-market negotiations to buy the stock at N125 per share.
A transaction note at the weekend indicated that nine deals were struck for 16.26 million ordinary shares of 2.0 kobo each of MTN Nigeria at N125 per share at the negotiated dealing window of the NSE.
The negotiated deals were struck at 14.78 per cent premium to the closing price of N108.90. Under the rules at the open market at the NSE, the maximum daily allowable price change is set at 10 per cent.
As off-market, negotiated cross deals, it means that the deals were not subjected to the dynamics of price discovery for the particular period. Off-market trade implied that the deals were previously negotiated and only sealed through the transfer portal of the Exchange.
The negotiated cross deal platform of the Exchange is a special-purpose trading platform that is meant for voluminous transaction. By the cross deal, it implies that the buyer and the seller had been prearranged and the transfer at the stock market was a mere perfection of the agreement between the two. The negotiated cross deal allows the parties to the deal to close the deal at reduced cost.
MTN Nigeria Communications rose by the maximum daily allowable price gain of 10 per cent on Friday, chalking up a whooping N201.47 billion capital gains in second day of trading at the stock market. MTN Nigeria on Thursday listed by way of introduction 20.35 billion ordinary shares at N90 per share.
MTN Nigeria’s share price, which rose by 10 per cent or N9 on Thursday, also rose by the same maximum percentage on Friday, adding N9.90 to close now at N108.9 per share. With the ongoing rally, MTN Nigeria has gained N384.62 billion in two days, pushing its market value from initial listing value of N1.83 trillion to N2.22 trillion. The off-market deal valued MTN Nigeria at N2.54 trillion, some N400 billion below Dangote Cement, the most capitalised quoted company. Many analysts believed that MTN Nigeria will overtake Dangote Cement as the most capitalised company at the Nigerian stock market this week.