Contributor, Benzinga
October 12, 2021
$2.64
-0.01[-0.38%]
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When the COVID-19 pandemic began spreading to multiple countries, virtually every sector that wasn’t associated with contactless healthcare solutions suffered a sharp initial impact. That included the global telecommunications sector, which endured operational, workforce and supply chain disruptions which may impact the industry’s current and future financial reports, per a warning from accounting firm PwC.

Nevertheless, the market is too critical to stay on the sidelines indefinitely. Although the pandemic delayed the international rollout of the fifth generation of cellular networks — commonly abbreviated as 5G — most nations are focused on getting back on track as soon as possible. Beyond just the rapidity of data transfers, 5G enables the actualization of myriad technologies.

Primarily, because of 5G networks’ low latency (or the time elapsed between a mobile device’s request and a server’s response), the underlying telecom technology facilitates the next-generation of pioneering solutions, such as smart cities and transportation channels.

But perhaps the biggest impact4 that 5G ushers in is a new era of economic democratization, whereby developing and frontier markets gain access to the same technologies undergirding western civilizations. Therefore, the initial public offering (IPO) of IHS Holding — a telecom infrastructure investment focused on emerging nations — has garnered tremendous appeal.

When is the IHS Holding IPO Date?

Among the more popular public market debuts for the week beginning Oct. 11, 2021, IHS Holding will make its debut on the IPO calendar on Oct. 14. Shares will list on the New York Stock Exchange under the ticker symbol IHS.

Last week, the telecom firm — which is one of the world’s largest independent owners, operators and developers of shared telecommunications infrastructure — announced the terms of its IPO. Per a corporate press release, the deal will involve the distribution of 22.5 million ordinary shares, 18 million of which IHS will sell and 4.5 million earmarked from the accounts of certain selling stakeholders.

The company estimates that its initial offering price will land between $21 and $24 per share. At the highest end of the spectrum, IHS will raise $540 million, not taking into account expenses related to the IPO. Further, at that level, IHS would command a valuation of approximately $8 billion, per a Reuters report.

Because the telecom specialist is also the world’s independent multinational emerging-market-only tower operator, with a particular focus in the high-potential (albeit high-risk) Africa market, IHS stock enjoys substantial support. Financial powerhouses Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), Royal Bank of Canada (NYSE: RY), Barclays (NYSE: BCS) and Absa Group are the joint bookrunners for this IPO.

Generally speaking, a public market debut featuring several major institutions underwriting the deal provides some measure of confidence in attracting a higher price. While absolutely no guarantees exist, expanding the “coverage area” through different banks opens the floor to several client bases.

At the same time, you should be aware that 2021 has been a frenetic year for new issues globally. Per another Reuters report, the first 9 months of 2021 featured the most number of fresh listings since the dotcom bubble of 2000. Therefore, investors will want to balance their exposure to IHS stock against the possible backdrop that the IPO market is stretched.

IHS Holding Financial History

When assessing the viability of a new public investment, most prospective buyers key in on the total addressable market (TAM). As one of the best measures to determine the potential fairness of an IPO’s valuation, investors can make evidence-based decisions on how much risk capital to allocate. The beauty of IHS stock is that the underlying industry is one of the largest available.

Per data from Grand View Research, experts project that the global telecom services market size will reach $2.47 trillion by 2028, representing a 5.4% compound annual growth rate (CAGR) from 2021 to the end of the forecasted period. Further, leaders in telecom infrastructure services in emerging areas offer plenty of opportunity.

For instance, ResearchAndMarkets.com points out that telecom revenues in Sub-Saharan Africa will likely reach $53.3 billion amid “affordability, regulatory and macroeconomic challenges.” Further, the “positive growth in telecoms retail revenue will be largely proportional to the economic growth” across the region, implying that bolstered infrastructure could lead to greater opportunities for service providers.

Naturally, this circumstance bodes well for IHS stock as the underlying company features operations in Côte d'Ivoire, Nigeria, Cameroon, Rwanda and Zambia. Also, IHS has operations in Columbia, Peru and Brazil, thereby having the potential to tap into slices of the Latin America market, which in total features 670 million broadband subscribers at the end of 2019.

As for the company’s financial performance, IHS generated revenue of $1.4 billion in 2020, up 14% against 2019’s tally — a solid result considering the devastation of COVID-19, particularly toward nations with less-developed healthcare infrastructures.

Better yet, IHS has been able to keep this sales momentum into 2021. For the trailing 6 months ending June 30, the telecom firm posted revenue of $763.6 million, up nearly 15% from the same period 1 year ago. Also, earnings before interest, taxes, depreciation and amortization (EBITDA) in the first half of this year were $490 million, significantly higher from the $375 million posted in the same period of 2020.

IHS Holding Potential

According to research from Mordor Intelligence, the African entertainment and telecom market could command a CAGR of 11.2% from 2021 to 2026. Per its analysis, with “most African markets projected to grow online video revenues, the region’s digital consumption growth is among the highest in the world.”

A key factor to this growth potential of IHS stock is the continent’s proportion of youth. Africa’s population pyramid is exactly that, a pyramid. In other words, the bulk of the region’s population comprises people under the age of 40. Moreover, each successive age grouping is larger than the preceding one, which means that on balance African nations are replenishing their communities.

From an investment perspective, you couldn’t ask for a more favorable backdrop for IHS stock as it means your dollars will benefit future generations (provided the underlying company makes astute decisions).

obile solutions, which only emboldens the bullish thesis for IHS stock. For instance, Euronews.com reports that the appetite for virtual currencies in Nigeria — one of IHS’ key markets — is growing stronger despite government threats of a clampdown.

Although rising digital fluency is an encouraging development, prospective buyers of IHS stock should be aware that much of Sub-Saharan Africa is a frontier market: rich in potential but full of pitfalls. Therefore, strict money management is crucial to trade this sector.

How to Buy IPO (IHS) Stock

If you don’t have a pre-IPO arrangement, you’ll have to acquire IHS stock on the open market, which may come at a premium due to the associated hype. On the other hand, this route is the easiest if you know how to buy stocks. If you don’t, follow the steps below.

Step 1: Pick a brokerage.

For serious investors of new public offerings, you should consider narrowing your list of best brokers to platforms that provide access to select pre-IPO opportunities or the ability to buy new issues at their original asking price. Keep in mind that you may need to apply ahead of time for certain pre-IPO offers.

Step 2: Decide how many shares you want.

By default, IPOs are unpredictable and risky. Therefore, it’s in your best interest to trade with a balanced share count to mitigate downside.

Step 3: Choose your order type.

Before placing your first order, understand these market concepts.

  • Bid: The buyer’s highest offer for a stock.
  • Ask: The seller’s lowest acceptable price.
  • Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers. Narrower spreads are tied to high-volume, low-risk markets while the opposite is true for wider spreads.
  • Limit order: Buy or sell requests at a specific price, limit orders provide transparency but no execution guarantees.
  • Market order: Market orders guarantee fulfillment but only at the prevailing rate.
  • Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only exit positions at a specified price, but they also carry non-fulfillment risks.

Step 4: Execute your trade.

Follow these steps to execute a market order:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

IHS Restrictions for Retail Investors

Before engaging in an IPO, review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons to avoid legal troubles.

IHS Pre-IPO

Usually, underwriters of traditional public market debuts sell new issues to their choicest clients, almost always institutional investors. This action rewards these high-dollar entities for participating in the process but also leaves out regular retail investors. To remedy this, companies like ClickIPO democratize the IPO process by offering pre-IPO opportunities for certain enterprises with public ambitions.

Emerging Potential for the Bold

With exposure to Africa, Latin America and the Middle East, IHS stock doesn’t just represent an emerging market opportunity but a frontier one as well. This dynamic opens the door to wild profitability potential, not dissimilar to investing in China prior to its economic miracle. However, many have played in this region only to encounter disaster, so risk management cannot be dismissed.

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About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.