Cell C shares began trading on the JSE on Thursday, marking the end of a turbulent chapter for majority shareholder Blu Label Unlimited, while adding to a good year for the local exchange.
The debut received a mixed reception from market players. For some, the listing is a celebration of a hard-earned turnaround, while others see it as premature.
The stock officially began trading, under the share code CCD, with the first trade going through at R27, a little above the initial public offering (IPO) price of R26.50.
The share gained 1.88% on the day to R27.50, valuing South Africa’s fourth-largest mobile operator at about R9.35bn. This is somewhat lower than the R10bn-R12bn that the group initially thought it could get.
Cell C had successfully placed a third of its shares before the IPO.
The offer closed on November 21, with 102-million sale shares, representing an aggregate amount of about R2.7bn, allocated to “selected qualifying investors”.
The company will have a total of 340-million ordinary shares in issue.
This comes a few days after Cell C’s parent, Blu Label Unlimited, approved the final offer price after the bookbuild process.
While some in the investor community had wanted Cell C to perhaps trade for a year under its new structure before listing, CEO Jorge Mendes told Business Day that it was better to move quickly.
“We wanted to get moving on the front foot. We need to clean up this balance sheet; we need to be in the public [market]. Our credibility has been coming back into the market a lot over the past two years and four months.”
He said the timing will always be in question.
“We could run the key business for a year and then something happens in the US, and then the market is a problem … or perhaps something happens at Blu Label, and that’s a problem.”
For the JSE, the new listing caps a good year for Africa’s largest stock exchange after a spate of delistings in recent years.
“This marks our fifth listing this year and our second IPO where the public have had a chance to actually participate in the bookbuild,” head of primary markets at the JSE, Maurice Madiba, said in an interview.
“It’s really good that investors can now access it as a standalone, where previously they had to use a proxy to gain access to the growth story and opportunity set of Cell C through Blu Label.”
Cell C has long harboured ambitions of going public — a plan first floated by former CEO Jose Dos Santos in 2018. However, that plan came to nought as the company struggled to make a profit, making its IPO a challenging prospect for investors.
Blu Label has recapitalised Cell C twice, in 2017 and 2022. The effect of those transactions was the prepaid specialist taking on a mountain of debt to keep the mobile provider running. Cell C’s listing gives Blu Label a mechanism to claw back some or all of this money.
Business Day reported previously that as part of the steps to prepare for the listing, The Prepaid Company (TPC) was buying Nedbank’s 7.53% stake and Lesaka’s 5.13% stake in Cell C.
TPC has taken on Nedbank’s debt claims against Cell C. These will then be converted into equity. The effect of this is a R1.3bn reduction in Cell C’s debt to R2.75bn.
Cell C will form part of the JSE’s telecoms services subsector. On listing, Cell C Group will comprise Cell C Holdings and its subsidiaries, including Cell C and Comm Equipment.
Before the IPO, the group underwent restructuring to facilitate the separation of Cell C through the formation of the consolidated group for purposes of the listing. The restructuring is meant to simplify Cell C’s capital structure, ensuring the group is well positioned to succeed in the publicly listed environment.
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