Efforts by the Nigerian Stock Exchange (NSE), to woo multinational companies in the telecoms, and oil and gas sectors to list on the nation’s bourse may continue to ‘hit a brick wall’, unless government withdrew completely from private business.
More so, regulators must interface with government to create appropriate regulation, tackle liquidity problem, and review other stringent listing rules.
Capital market stakeholders, who spoke on the dearth of Initial Public Offering (IPO) in the stock market, argued that aside withdrawing from business, government must introduce fiscal and monetary policies that would stimulate private sector investment.
According to them, a deliberate policy on incentive would attract more multinational firms’ in the telecoms, and oil and gas to float IPOs, which would ultimately resuscitate the primary market segment, improve the current illiquidity position, and deepen the market.
An IPO is the first time that the stock of a private company is offered to the public. Smaller, younger companies seeking capital to expand often issue IPOs, but this can also be done by large privately owned companies looking to become publicly traded.
Commenting, the Managing Director, Seplat Petroleum Development Plc, Austine Avuru, in an interview with The Guardian explained there is need for government to come up with fiscal incentives in the areas of taxation, custom tariff structure, and robust credit facilities.
Seplat Petroleum is one of two companies that have made public offerings in the last six years.
Avuru said: “All that government needs to do is to stimulate the growth of the private sector, and they can only do so by withdrawing themselves completely from private business, and come up with both fiscal and monetary policies that will stimulate the private sector.
“For instance, what kind of customs tariff structure do you have and how much protection does it offer without offending WTO rules? Again, you look at the banking sector, how much credit is available to private sector to expand, and at what cost?
“Borrowing at 22-28 per cent cannot grow the private sector, whereas competing countries are borrowing at single digit interest rate. These are key issues; once these are tackled, you start seeing major growth in the private sector, and then you’ll see entry into the capital market.”
Although some listed firms have approached the market for rights issues to existing shareholders, but only Seplat Petroleum, and Transcorp Hotels Plc, have offered IPOs since 2013. While Seplat’s, which was a global IPO, was 100 per cent successful, that of Transcorp Hotels recorded 50 per cent subscription.
Meanwhile, MTN Nigeria has formally unveiled plans to raise about N153billion ($500million) from the sale of shares in its Nigerian business this year despite the challenges trailing the decision.
Analysts are optimistic that the IPO would be the biggest in the history of the Nigerian capital market. But with the way and manner MTN was handling the issue; operators are doubtful the MTN IPO and subsequent listing on the NSE would happen this year.
An economist, Johnson Chukwu, in a telephone interview, said the current ownership structure of International Oil Companies (IOCs) would not allow them to list on the Exchange.
According to him, a framework that would enable IOCs to operate as a fully incorporated business with operational assets in Nigeria must be established.
Chukwu, who is also the Chief Executive Officer, Cowry Asset Management Limited, explained that government must create appropriate policies to encourage multinationals, which may not have compelling need to raise capital within the local environment to list on the bourse.
“The IOCs are not operating in Nigeria, but under incorporated joint venture arrangement. They do not own assets in Nigeria. We need to have IOCs operate their assets in Nigeria under a framework that makes for incorporation and fully incorporated businesses.
“Multinationals that have good financial position can access fund outside the country, they may not have compelling need to so in Nigeria. Therefore, Government can woo them with appropriate regulation in terms of tax incentive such as discriminatory withholding tax law that will impose lower withholding tax on dividend paid by listed firms.”
The Publicity Secretary, Independence Shareholders Association of Nigeria, Moses Igbrude, argued that there is no incentive in the market presently that would attract these multinationals to list in the market.
“Listing on the capital market means losing ownership, to allow investors to be members of the company; and such decision will be based on the perceived benefits that will accrue to the initial owners.
“The question is, are there intrinsic benefits that companies listed on the exchange are enjoying that limited companies are not enjoying? There is nothing attracting them to the market presently.
“For these companies to list on the Exchange depend on how the management of NSE is able to make clear those intrinsic benefits or advantages they will enjoy when they come to the market.
“Because listing of their shares will deepen the market, the Exchange need to do more to convince, encourage, and persuade these IOCs and multinationals to list their shares on the local bourse.”
An independent Investor, Amaechi Egbo, stressed the need for regulators to interface with other Exchanges to tackle liquidity problem and stringent listing requirements.
He argued that listing rules would continue to deter multinationals and IOCs from listing on the nation’s bourse if the current listing and post listing requirements are not further reviewed.
He noted that for the NSE to become a world class Exchange, it must continue to develop the market in such a way that it would enable companies to embark on cross boarder listing.
“We should develop our market in such that even foreign companies would have the need to be listed in our local market,” he said. (GuardianNG).
The Egyptian Exchange to witness 3 private offerings in 2019
Head of the Egyptian Stock Exchange Mohamed Farid – File Photo
CAIRO – 18 March 2019: The Egyptian Exchange (EGX) will witness three big offerings this year, including two listings worth LE 14 billion, Chairman of EGX Mohamed Farid said.
Farid added during his speech at the American Chamber (AmCham) that three private firms expressed their desire to enter the market, noting that the procedures of the offering have started.
He noted that the market value of the first company reaches LE 8 billion and the second one hits LE 6 billion, while the third one is still under evaluation.
About the timing of the offerings, he clarified at Egypt’s real estate industry conference that one of them will finish the procedures of the listing during the first half of 2019, and the other two will be floated in September or November 2019.
Farid stressed on Monday morning that offering the shares of a number of public companies on EGX is important to revive the market.
Farid added that the delay of listing the shares is not related to the bourse but to the companies themselves and their vision about the timing and the importance of the offering to reflect positively on them.
The chairman of EGX hoped for the completion of the companies’ offerings in different sectors on EGX.
By the end of February, Egypt floated a stake of Eastern Company on EGX, and the public and private offerings on the bourse were completed Wednesday, March 6, with a total value of LE 1.72 billion.
– EGYPT TODAY
FBN Holdings targets foreign stock market
Mr Urum Kalu Eke, Group Managing Director, FBN Holdings Plc, on Friday said that the group would seek listing in foreign markets where it operates at the appropriate time.
Eke said at a news conference to mark 125th anniversary of First Bank Nigeria Limited in Lagos that the company would liaise with investors and regulators at the right time when opportunities arise.
He said that FBN Holdings would seek foreign listing when the time was right and regulation was also conducive, but would maintain headquarters in Nigeria in line with the vision of the founding fathers.
“These are bold statements aligning with the vision of the founding fathers, in the course of time, we will evaluate opportunities even as we work with the regulators, as we work with investors, with a view that we will continue to maintain headquarters in Nigeria.
“We will spread our network when the time is right and regulation is also conducive, we will be able to make a statement about listing in those foreign markets,” Eke said.
He explained that listing was not something you do without a deliberate plan.
“At the time, the founding fathers set up First Bank in 1894, they have a view of a pan African institution with headquarters in Nigeria with presence across the globe.
“That is why few years after 1894, by 1896 we were in Accra and two years after we were in Sierra Leone, today we have expanded the scope of our coverage, we are in six African countries. We are in Asia and we are in Europe,” he stated.
The News Agency of Nigeria (NAN) reports that FBN Holdings, currently listed only on the Nigerian Stock Exchange, is the non-operating financial holding company of one of the largest banking and financial services organisations in Africa.
He, however, said that the company was very proud of the achievements of its flagship subsidiary, First Bank of Nigeria Limited.
“We are proud at FBN Holdings of the achievements of our flagship First Bank of Nigeria Limited over the last 125 years, and that makes us at the holding company level the premier and of course the largest financial services group in Nigeria today,” Eke said.
He said that the group played active role in merchant banking and asset management sector as well as in insurance space.
“Just as we celebrating the commercial bank we can list a whole lot of achievements that have been recorded by the merchant bank through FBN Quest group and also the insurance.
“Today, the insurance company is the fastest growing insurance company in Nigeria and we are proud of what they are doing,” he added.
Eke noted that insurance had very low penetration in Nigeria with less than one per cent against 15 per cent penetration in South Africa.
“Talking about the life insurance business, it’s not just about taking insurance to the cities, we are also present across the country, wherever you find First Bank, we have a life insurance staff embedded in those branches
“We are saying we can play a very dominant role in championing insurance deepening in Nigeria, the same thing you can say about our FBN Quest group,” Eke said.
He said that the company had supported the Federal Government and sub-Nationals to raise bonds and capital for infrastructure development.
The group managing director said that through the pedigree of its franchise, it enabled government to raise N200 billion Sukuk bond in two tranches.
“At the holding company level, I need to say that there is so much confidence by the investing public in the brand so we can say today we are the largest in shareholder base,” he said.
He said that FBN Group had about 1.3 million shareholders, comprised of 17 per cent international institutional shareholders and about 36 per cent retail.
Also speaking, Mrs Ibukun Awosika, Chairman First Bank of Nigeria, said that the bank wold remain committed to the development of entrepreneurs to scale up employment rate.
Awosika said that the bank had invested heavily in organising programmes that would enhance knowledge of Small and Medium Enterprises.
Jumia, Konga list billion dollars IPOs
Jumia and Konga, two major players in the e-Commerce, are creating visible excitement with eye-catching listing of their shares on the international market.
Jumia is planning an initial public offering (IPO) in New York this year which will reportedly see the business valued at $1.5 billion.
Elsewhere, Konga, Nigeria’s biggest Omni- channel e-Commerce group, is also reportedly set for a major listing on either the London Stock Exchange or New York Stock Exchange (NYSE) by the last quarter of 2020.
Konga Group is set for an initial public offering that will see the e-Commerce giant valued at about $3.2 billion, further shoring up the potential of the industry in Nigeria, Africa’s biggest market.
Investigations reveal that Mark Jessey, a prominent stock analyst on NYSE had hinted of the strong possibility of Konga IPO before the end of next year.
A move which, according to him, is a much sought-after one by investors, many of whom have followed within the last eight months the huge strides and trajectory of the business which came under new ownership after the exit of previous majority investors, Naspers and AB Kinnevik.
While Jumia’s successful listing could help MTN reduce its debt which unconfirmed reports indicate to have increased to over five billion dollars in June from about $4.1 billion at the end of 2017, Konga’s imminent IPO is one that should see the business excite a horde of potential investors, going by the current standing of the company.
Commenting on the likely listing of Konga, Chris Uwaje, Africa chair for IEEE World Internet of Things (WIoT), noted that the company has added huge value to the e-commerce landscape which should see its value gross over $3.5 billion.
“Within the last seven months, I am aware that the new owners of Konga have repositioned the company strategically and upped the overall value of the business.
Konga could claim to be unarguably the most structured e-Commerce company in Africa, with huge infrastructure and technology back-bone which is rare in Africa and which is the strength of global players such as Amazon and Alibaba.
“In valuing Konga, you must consider its strategic 360 degrees Omni-channel strategy, their Central Bank of Nigeria-licensed mini bank – KongaPay which I am sure cannot be valued anything less than $750 million and best in Africa digital logistics division known as Kxpress with a nationwide network.
“I know Konga is likely the only company that does about 90 per cent of her long haul and last mile deliveries in the continent,’’ Uwaje said.