Category: Capital Market

Securities and Exchange Commission (SEC) has stated its readiness to partner the Nigerian Agricultural Insurance Corporation (NAIC) to further deepen the commodities trading ecosystem.

Director-General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda stated this during a meeting with the management of NAIC in Abuja at the weekend.

Yuguda stated that the commission is committed to developing the commodities ecosystem as a potent way forward in Nigeria’s quest for sustainable foreign exchange earnings and economic development.

According to him, “In the past few months, this has been exacerbated by low oil production and oil theft in the country. This has often resulted in foreign exchange shortages and balance-of-payment problems’’.

He said the Commission as part of its implementation of the 10-year Capital Market Master Plan, constituted a technical committee on commodities trading ecosystem whose mandate was to identify challenges of the framework and develop a roadmap for a vibrant ecosystem.

“A committee comprising of various stakeholders including the SON was set up to drive the implementation of the report. One of the recommendations in the report identified the development of grading and standardisation system in line with international best practice. We are therefore willing to also work with NAIC to grow the commodities sector.”

Yuguda stated that the SEC and NAIC have a lot of things in common as both organisations are government agencies working towards the growth of the commodities sector of the economy.

According to Yuguda, “The SEC has been doing a lot of things in the commodities sector and the role of NAIC in this sector cannot be over emphasised and based on that, we would like to explore areas of collaboration to see how far we can help grow that sector together’’.

The SEC DG said there are markets that need these commodities that are produced in Nigeria but lamented that the only impediment at the moment is lack of standards which he stated, is the reason some of the commodities are not being accepted in the international market.

He assured that the SEC is working hard to ensure that agricultural produce meet international specifications for export hence the need to also work with NAIC in a bid to be able to mitigate various risks in the ecosystem when they happen adding, “This sector is key to our country’s future. If we can harness it, it will greatly improve the economy of this country.

Also speaking, Executive Commissioner Operations of the SEC, Mr. Dayo Obisan said enormous opportunities abound in the entire agricultural value chain, that if well harnessed would lead to further development of the nation’s economy.

“There has been a couple of developments in the commodities side, the entire value chain is quite large. The farmers want someone to take up the crops, even local companies in Nigeria can do that. They need quality seeds as well as the funds to buy them. If the sector is not de risked, it will be difficult to attract investors.

There are a lot of things we can do together and we are looking forward to this partnership with you” He added.

In her remarks, Managing Director of NAIC Mrs Folashade Joseph, stated that her organisation is willing and available to push forward any initiative that will add value to the population and the nation’s economy.

“It is a privilege to do this, as things begin to evolve, we try to push forward what will add value to the population. Our focus is on commodities. There are various evolving issues during the course of our business as insurers because we manage across the value chain”.

The NAIC MD added that in areas of storage and insurance issues, the collaboration will be of great benefit to all parties involved and assured that NAIC is ready to provide their expertise in anything that will add value to the commodities ecosystem.

Ellah Lakes plans to raise about N2.9 billion from its shareholders as the agricultural company seeks to strengthen its balance sheet to support new business developments.

In a regulatory filing at the weekend, Ellah Lakes stated that it plans to issue 1.0 billion ordinary shares of 50 kobo each to existing shareholders at N2.90 per share.

The N2.9b rights issue will be pre-allotted on the basis of one new share for every two shares held as at the close of business on Friday, February 10, 2023.

The Nigerian Exchange (NGX) confirmed that it has received application from Ellah Lakes seeking approval for the N2.9 billion rights and subsequent listing of the rights issue after completion.

Ellah Lakes has signed many agreements in recent period for major projects that are expected to form the backbone of the company’s business diversification drive.

It had reached agreement to build a 600-tons sugar refinery in collaboration with Montserrado Investment Ltd. The sugar processing facility is expected to run on 100 per cent renewable power.

Ellah Lakes had earlier reached agreement with Ondo State on the development of a palm oil and cassava farm, covering about 5,000 hectares. Both partners would jointly develop and manage the farm for the cultivation of oil palm and cassava in Ondo state.

Ellah Lakes had in August 2020 entered into exclusive discussions to acquire the entire issued capital of an oil palm processing company with substantial assets in Delta State.

Chief Executive Officer, Ellah Lakes Plc, Chuka Mordi said the refinery agreement was a significant landmark for the company in fulfilling its strategic objective of diversifying its portfolio and production base.

“We are very pleased at this collaboration and look forward to a mutually beneficial, valuable and fruitful venture,” Mordi said.

He noted that the new sugar plant aligns with the National Sugar Master Plan (NSMP) being championed by the National Sugar Development Council (NSDC), which is geared towards accelerating the development and growth of the local sugar industry to achieve national self-sufficiency.

Ellah Lakes was incorporated on July 2, 1980 and was listed on the Nigerian Exchange (NGX) on January 14, 1993.

Originally a fish-farming company, Ellah Lakes had recently embarked on a comprehensive restructuring and diversification of its businesses. In 2019, it acquired Telluria in order to diversify its product offerings in the agribusiness sector.

Ellah Lakes acquired 100 per cent equity stake in Telluria with effect from May 7, 2019. Having complied with all the necessary regulatory requirements, the acquisition was approved by the NSE and Securities and Exchange Commission (SEC).

Mordi has said ongoing restructuring would make Ellah Lakes to attain profitability and further foster its vision of being the leading supplier of sustainable edible oil and starch to the consumer goods sector in Nigeria.

He noted that prior to 2019, Ellah Lakes was an insolvent entity but Telluria Ltd completed a reverse acquisition of the company, recapitalising the balance sheet and repositioning the business for growth with a new board and management team.

“Today, we are undergoing a restructuring exercise, which will return the business to profitability and reposition it as a leading agribusiness player across West Africa. From a corporate governance point of view, we hold ourselves to high standards of governance as expected by our shareholders and regulator, and as is befitting of our vision to become the leading supplier of sustainable edible oils and starch to the FMCG Industry in Nigeria, particularly, and West Africa, in general,” Mordi said

Nigeria’s largest food company, Flour Mills of Nigeria Plc, plans to raise up to N40 billion in new debt capital to bolster its working capital and further diversify its balance sheet.

Preliminary documents obtained at the weekend indicated that Flour Mills is concluding arrangements to launch a N40 billion commercial paper issuance, being the first two tranches of its N200 billion commercial paper (CP) issuance programme.

 The net proceeds of Series 1 and 2 CPs would be used to “support its short-term funding requirements, as part of its working capital management strategy”, according to the documents.

Shareholders of Flour Mills had approved major restructuring and capital injection programmes for the group.

The massive restructuring could lead to unbundling of the component businesses and assets of one of the largest conglomerates.

Shareholders gave approval to the group to raise up to N200 billion in additional capital in support of its growth plan and the massive restructuring programme.

FMN’s finance costs had jumped by 79.12 per cent to N8.150 billion in 2022 from N4.55 billion in 2021; contributing to the marginal increase in profitability recorded during the period.

The board of directors of group affirmed that it had received shareholders’ approval to undertake certain restructuring of the group’s businesses and to raise additional new capital.

The approvals enable the group to remove or separate all its manufacturing businesses as well as all the power assets of the company.

While the structure of the emergent company post-unbundling is still sketchy, market analysts said FMN may adopt a holding company structure, which allows the company to optimise the potential of each segment of its businesses and assets and reduce substantially the risks of grouped liabilities.

Incorporated in 1960, FMN is a vast food and agro-allied company with operations in flour milling; production of pasta, noodles, edible oil and refined sugar; production of livestock feeds; farming and other agro-allied activities; distribution and sale of fertiliser; manufacturing and marketing of laminated woven polypropylene sacks and flexible packaging materials; operation of Terminals A and B at the Apapa Port; customs clearing, development of real estate properties for rental, forwarding and shipping agents and logistics.

Flour Mills had recently acquired 71.69 per cent stake in Honeywell Flour Mills (HFM) at a total enterprise value of N80 billion. HFM is a separate quoted entity on the Nigerian Exchange (NGX).

FMN’s turnover had hit the N1 trillion mark in the immediate past year ended March 31 2022. The audited report showed that group turnover rose by 51 per cent from N772 billion in 2021 to N1.16 trillion in 2022. Gross profit stood at N108 billion as against N106 billion in the previous year. Profit after tax was almost flat at N7.328 billion in 2022 as against N7.261 billion in 2021.

The Federal Government has expressed its commitment to continue to improve the diversification of the economy by steadily growing other sectors particularly the commodities trading ecosystem.

The assurance was given by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed during the presentation of gold coin to her by the Lagos Futures and Commodities Exchange (LCFE) in Abuja at the weekend.

Ahmed expressed her pleasure at the presentation as she stated that it is one of the results of the federal government’s commitment in continuing to improve efforts at diversifying the economy.

 “This is really very pleasing for me because we have been trying to improve the diversification of the Nigerian economy. People say we need to diversify the economy, but the Nigerian economy is truly diversified. Our GDP today has 6.4% contribution from the oil and gas sector, so 94.6 per cent of the Nigerian economy is from other sectors. One of the sectors that we have been trying to activate the full potentials is the mining sector.

 “The mining sector today is still very small, but that is on the side of government. But in the private sector and now I am glad in the states, there is very active mining activities that is taking place. Unfortunately, until now, we have not been getting the full value of the mining activities. Mining activities have been largely artisanal, there is a lot of participants that take out our minerals without reporting it, without government or even the miners getting full value for it,” Ahmed said.

She noted that in a bid to get the full value of mining activities in the country, the president had approved and set up the Presidential Gold Mining Scheme with the Solid Minerals Development Agency leading.

“They had set up a pilot that started from Kebbi State where they supported the artisanal miners to be able to practise better mining practices and also to off take the minerals that they mine, and do some first level refining. Then the central bank offtakes this and sends it out of the country for proper mining.”

 “The essence for us is to begin to hold our reserves in minerals like gold so that our reserves are not all in US dollars. We know what happens to US dollars and what can happen to it. We are beginning to have our reserves in gold,,” Ahmed said.

She disclosed that the scheme, even though it was started by the federal government has seen refineries beginning to actually work in Nigeria adding that there is one in Ilesha, Segilola which was the first refinery that was licensed in Nigeria.

“This gold is now being mined in Nigeria, refined in Nigeria up to the point of producing bullions and then off taken by the CBN and other organisations like the LCFE. They are also coming forward to facilitate the trading of gold in the commodities exchange in Nigeria. That’s what we want, we wanted to be able to activate the full circle. What was missing was the off taking, now the off take is being addressed and this will help to drive demand.

 “Once there is demand in the market end, the producers will be encouraged to produce more, there will be more employment, we will begin to see more banks supporting this mining sector. Before now the banks were not too interested in supporting the mining sector because of the long gestation period. The investment is actually worthwhile and we will encourage these businesses to grow and produce more. I want to congratulate the LFCE for being the first of its kind in Nigeria to achieve this,” Ahmed said.

She congratulated the SEC for pushing the milestone, and expressed the hope that more commodities exchanges will come up as a result. 

She therefore charged the SEC to enable these companies to be able to operate because it is needed in the market to drive the kind of volumes that Nigeria hopes to get.

Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda commended the minister and the federal government on their determination to bequeath a vibrant commodities sector.

 “LCFE is into a number of commodities and gold is just one of them. They have worked hard in this gold sector. This gold is 100 per cent Nigerian gold, mined and refined in Nigeria and I am happy that we have your support in this. Thank you very much for making this possible, we appreciate all the guidance and support you have provided so far,” Yuguda said.

Managing Director, LCFE, Mr. Akin Akeredolu-Ale expressed appreciation to the SEC for all the regulatory support the commission has provided in recent times.

Akeredolu-Ale stated that Nigeria is a commodities country, but has a large potential that is untapped so far and solicited the support of the National Assembly in passing the Investments and Securities Bill which e said will bring about massive development in the sector.

 “I thank the SEC for pushing the Investments and Securities Bill because that is the legal and regulatory framework that is supposed to support the capital market and by default the commodities trading ecosystem.

“We are hoping that the bill is approved so that we are able to have a hold on the commodities space and the revenues that are slipping out of Nigeria. We need that bill passed to be able to function more effectively,” Akeredolu-Ale said.

•Telco screens Nigerian shareholders for free shares
•NGX, MTN to drive financial inclusion
•’Shareholders got N318b dividends in 2022’

Nigeria’s leading telecommunications company, MTN Nigeria Communications (MTN Nigeria) Plc is exploring a cash dividend conversion arrangement that will allow shareholders to convert as much as N204 billion cash dividends into ordinary shares of the company.

The cash dividend conversion plan comes as the telco begins screening of its shareholders’ register to determine Nigerian shareholders eligible to receive incentive shares that were part of the group’s public offer for sale, which was concluded in January 2022.

Regulatory documents and market sources at the weekend indicated that MTN Nigeria has decided in favour of the two-way optional dividend arrangement that allows shareholders to elect to receive cash or convert cash dividend to ordinary shares.

The two-way optional dividend arrangement has gained traction among multinational companies, which face the challenge of foreign exchange (forex) repatriation and are also desirous of indirectly boosting their controlling stakes in their Nigerian operations. Companies operating this optional arrangement include Stanbic IBTC Holdings and Nigerian Breweries.

The board of directors of MTN Nigeria had recommended distribution of a final dividend of about N204 billion for the 2022 business year, representing a final dividend per share of N10. This increases the possible total dividend payout for the 2022 business year to about N318 billion or N15.60 per share, after the company had paid interim dividend of N113.99 billion or N5.60 per share during the year.

The final dividend will be paid electronically on April 20, 2023 to shareholders on the register of the company by the close of business on March 27, 2023. 

Chief Executive Officer, MTN Nigeria Communications (MTN Nigeria) Plc, Mr. Karl Toriola, said the company anticipates that the two-way optional dividend arrangement would have received regulatory approvals ahead of the annual general meeting (AGM) scheduled for April 18, 2023.

Market sources in the know of the processes said the two-way optional dividend arrangement could be presented to shareholders at the April 18, 2023 AGM, alongside other resolutions, allowing shareholders to make their choices ahead of the April 20, 2023 dividend payment date.

MTN International (Mauritius) Limited, which holds 72.83 per cent controlling equity stake in MTN Nigeria is expected to be the biggest beneficiary of the dividend conversion option.

Market sources also said the telco has begun pre-allotment screening for the distribution of free, incentive shares to Nigerian investors, after the expiration of the holding period last week.

The company will also pay final dividend on the incentive shares, according to informed sources.

MTN Nigeria had included an innovative incentive structure of one free share for every 20 purchased, subject to a maximum of 250 free shares per investor, in its December 2021 public offer for sale. Thus, an additional 4.28 million shares may be allotted to qualifying investors who held the shares allotted to them for 12 months till January 31, 2023.

To benefit from the incentive shares, a subscriber must have held at least 20 shares for the 12-month period and must be on the register of the company as at January 31, 2023.

The pre-allotment screening will enable the company to determine the total number of free shares to be distributed and the proportionate allotment per qualified shareholder. The final free share allotment proposal will thereafter be presented to the Securities and Exchange Commission (SEC) and the Nigerian Exchange (NGX) for their approvals.

The company has stated that all qualified shareholders on the register of the company as at January 31, 2023 would have their incentive shares credited automatically to their Central Securities and Clearing System (CSCS)’s accounts.

A market analyst estimated that the two-way optional dividend conversion and the free shares might increase the group’s outstanding shares, currently at 20.355 billion ordinary shares of two kobo each, to more than 21 billion ordinary shares of two kobo each.

Key extracts of the audited report and accounts of MTN Nigeria for the year ended December 31, 2022 showed double-digit growths across key performance indicators.

Total revenue increased by 21.6 per cent to N2.01 trillion. Earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 22 per cent to N1.1 trillion.

EBITDA margin thus inched up by 0.2 percentage points to 53.2 per cent. Profit before tax rose by 22.3 per cent to N534 billion.

After taxes, net profit improved by 20.2 per cent to N358.9 billion.Thus, earnings per share (EPS) rose by 21.3 per cent to N17.79 kobo in 2022.

Total assets rose from N2.26 trillion in in 2021 to N2.72 trillion in 2022. Total liabilities rose from N2 trillion in 2021 to N2.38 trillion in 2022. Shareholders’ funds increased from N264.99 billion to N334.24 billion.

The operational report also showed considerable improvements with mobile subscribers rising by 10.5 per cent to 75.6 million, adding 7.2 million subscribers in 2022. Active data users increased by 15.3 per cent to 39.5 million, an addition of 5.2 million active users in 2022. Active fintech subscribers also rose by 57.5 per cent to 14.9 million, with 2.0 million active mobile money (MoMo) wallets since the launch of PSB.

Toriola said the group’s performance was driven by its strong commercial momentum, supported by an accelerated investment in its network, which enabled growth across all revenue lines.

He added that the group’s ability to maintain service revenue growth while unlocking efficiencies through disciplined execution of its expense efficiency programme also positively impacted the bottom-line during the year.

“We continued to manage and invest in the resilience of our business and networks, expanding coverage and capacity with a focus on expense efficiencies and disciplined capital allocation. We became the first mobile network operator to launch a 5G network in Nigeria, providing coverage in key cities in the six geopolitical regions. Since its commercial launch in September 2022, we have rolled out 588 sites and brought the 5G network to 5G-enabled smartphones, starting with iPhone users,” Toriola said.

He assured that regulatory compliance remains at the heart of the group’s business and embedded in the strategic priorities that underpin its ‘Ambition 2025’ strategy, noting that the group was recognized by the Nigerian Exchange as the listed company with the highest level of compliance with the rules of the Exchange and other applicable laws and regulations. This followed the group’s recognition by Federal Inland Revenue Services (FIRS) as one of the most tax-compliant organisations in Nigeria.

He pointed out that while the operating environment continues to experience headwinds from the ongoing global macroeconomic and geopolitical volatility, the group will continue to invest in the resilience of its business, taking advantage of opportunities embedded within its connectivity and platform businesses.

“We will continue to ramp up gross connections and implement our NIN recovery initiatives to grow the subscriber base. This will be supported by an aggressive pursuit of our rural telephony programme to expand broadband access and drive further digital inclusion.

“In addition, we will continue accelerating 4G and 5G coverage to accommodate the demand for data while pursuing our home broadband strategy to capture a significant share of market growth. We plan to achieve 83 per cent 4G population coverage in 2023 while continuing to roll out additional 5G sites and bring the 5G network experience to more smartphone users.

“Accelerating the growth of our MoMo PSB remains a key focus as we execute our fintech strategy. Accordingly, our immediate priority is to reopen the NIBSS interface for outbound transfers and scale commercial activities focused on growing active wallets while continuing to enhance our governance framework and control environment. Over time, we will leverage our market-leading distribution to evolve the mix towards more advanced services across our fintech verticals, in line with our Ambition 2025 strategy.

“Environmental, Social and Governance (ESG) practices remain at the core of our Ambition 2025 strategy. We are committed to net zero emissions by 2040 and 50 per cent women representation by 2030 as part of our ESG goals while we continue our journey to embed sustainability practices in our operations, a crucial part of our ongoing culture transformation programme.

“As we invest in our network to further strengthen our commercial operations, we focus on expense efficiencies and disciplined capital allocation to support earnings and cash flow generation. As a result, we maintain our service revenue guidance of “at least 20 per cent” and EBITDA margin target range of 53-55 per cent over the medium term. However, a significant devaluation of the Naira, heightened inflation and lack of tariff increases are risks to the medium-term guidance. Therefore, we continue to engage the authorities in relation to regulated tariff increases in the current high-inflation environment.

“Finally, we remain committed to executing our Ambition 2025 strategy to sustain the growth and profitability of the business to the benefit of all our stakeholders,” Toriola said.

Meanwhile, Nigerian Exchange (NGX) and MTN Nigeria have both reiterated their commitment to closing the financial literacy in Nigeria. Both companies had in 2022 signed a Memorandum of Understanding (MoU) that has led to the birth of several initiatives contributing to closing the financial inclusion gap in Nigeria.

President and Group Chief Executive Officer, MTN Group, Ralph Mupita recently visited the NGX to reiterate the commitment of the group to fostering its relationship with the NGX.

He noted that within a year of signing the MoU much had been achieved due to the hard work invested on both sides in forging and sustaining a productive partnership.

“At MTN, we believe we have a responsibility to ensure that our customers not only stay connected but can access increasing value and better services through our network, deepening their participation in the digital economy. Our collaboration with NGX gave us the opportunity to empower our customer base with the tools and knowledge to engage effectively with the capital market and meet their financial and investment objectives,” Mupita said.

Toriola added that MTN would explore other areas of cooperation with NGX to leverage their continuously mutually beneficial partnership that will contribute to the inclusive growth of the Nigerian economy.

Chief Executive Officer, Nigerian Exchange (NGX), Mr Temi Popoola said the Exchange was proud to acknowledge the advancements made through the MTN Nigeria’s successful public offering in 2021 and the MoU signed in 2022.

“These initiatives have successfully attracted a notable portion of the younger generation to the capital market, aligning with our goal to increase retail participation,” Popoola said.

MTN is also a participant in the Nigeria2Equal project, an initiative by International Finance Corporation (IFC) in partnership with NGX that seeks to drive increased female participation across the board and managerial levels of the Nigerian private sector.

MTN Nigeria’s N97.18 billion public offer had recorded a subscription of N135.53 billion, representing an oversubscription of 39.5 per cent.

MTN Nigeria had offered 575 million ordinary shares of 50 kobo each to the general retail investing public at a price of N169 per share. Application list for the offer had opened on December 1, 2021 and it closed by 5.00 pm on December 14, 2021, as scheduled.

Allotment details provided by MTN Nigeria indicated that additional 86.25 million shares were added to absorb oversubscription, in line with the provisions of the offer which allowed the issuer to absorb additional 15 per cent of subscriptions.

A breakdown showed that all retail shareholders received full allotment despite the oversubscription while institutional shareholders under the book building phase were pro-rated as a result of the oversubscription.

In a major boost for financial inclusion and gender equity, a total of 114,938 new accounts  from new market participants were created at the stock market while approximately 76 per cent of successful applicants through the digital platform were women, with 85 per cent of these under age 40.

Valid applications were received for 801.97 million shares, leading to the activation of the approved 15 per cent oversubscription clause of an additional 86.25 million of MTN Nigeria shares. In all, 661.25 million shares were allotted.

A total of 126,720 retail investors submitted valid applications and received full allotment; and institutional investors including pension funds, insurance companies, asset managers, corporates, and foreign portfolio investors that participated in the bookbuild were allotted 72.09 perent of their applications. These include Nigerian pension funds representing approximately 6.5 million Nigerian contributors.

With the successful completion of the offer, MTN Group’s shareholding in MTN Nigeria reduced by 3.25 percentage points, from 78.83 per cent  to 75.58 per cent.

The MTN Nigeria’s public offer had set record as the first to be delivered through a digital platform, thus facilitating maximum participation by investors. Investors were able to submit applications through the issuing houses, stockbrokers, banks and online through a unique digital application platform, PrimaryOffer, administered by the NGX.

MTN Nigeria had indicated that more than 89 per cent of retail offer subscribers applied through the PrimaryOffer platform through mobile and web.

•May be susceptible to price manipulation

A total of 21 companies at the Nigerian Exchange (NGX) are suffering from overconcentration of their shares in the hands of core investors and directors, which may make them susceptible to price manipulation.

A compliance report by the NGX Regulation (NGX RegCo) at the weekend indicated that 21 companies have less-than-required minimum number of shares that should be available to minority retail shareholders, a major infraction that may adversely affect liquidity and efficient price discovery.

NGX RegCo is the self-regulatory organisation (SRO) that regulates activities at the Nigerian Exchange. Its mandate includes pre-listing, listing and post-listing surveillance at the primary and secondary markets.

The NGX RegCo noted that the compliance report, known as ‘X-Compliance Report’, was “designed to maintain market integrity and protect investors by providing compliance related information on all listed companies”.

According to the SRO, companies that are listed on NGX are required to adhere to high disclosure standards which are prescribed in the rules of NGX and other extant capital market rules.

The report listed 21 companies across several sectors which technically lack the minimum shares deemed appropriate for their listing categories.

The NGX RegCo usually tags companies with free float deficiencies with a red alert of “Below Listing Standard”, which implies non-conformity with the requisite listing and corporate governance requirements.

Minimum number of shares available for the general minority retail investing public, known as free float, is a major listing requirement at the stock market.

Under the rules at the Exchange, a company listed on the entry segment of the growth board is required to have a minimum of 10 per cent of the issued and fully paid up shares or the value of its free float is equal to or above N50 million. For standard segment of the growth board, a minimum of 15 per cent of the issued and fully paid up shares or the value of its free float must equal to or above N50 million. For the Alternative Securities Market (ASeM), a minimum of 15 per cent of issued and fully paid up shares or the value of its free float is equal to or above N50 million.

For the main board, where most of the quoted companies are listed, the free float is a minimum of 20 per cent of the issued and fully paid up shares or the value of the free float is equal to or above N20 billion. For the premium board, a minimum of 20 per cent of issued and fully paid up shares or the value of the free float is equal to or above N40 billion.

Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated or family holdings.

The deficient companies included Abbey Mortgage Bank, Aluminium Extrusion Industries, Austin Laz & Company, Capital Hotels, Champion Breweries, CWG, Ekocorp, eTranzact International, Geregu Power, Golden Guinea Breweries, Infinity Trust Mortgage, International Breweries, Medview Airline, Notore Chemical Industries, Prestige Assurance, Tourist Company of Nigeria, Transcorp Hotels, NPF Microfinance Bank, Union Dicon Salt, Union Bank of Nigeria and UACN Property Development Company (UPDC).

The report showed that several companies have major free float deficiency with less than five per cent of their shares available for public trading while only five of the affected companies have indicated possible dates for the resolution of the free float deficiency.

According to the report, all the deficient companies are listed on the main board of the Exchange. Abbey Mortgage Bank has a free float of 9.04 per cent, Aluminium Extrusion Industries, 16.27 per cent; Austin Laz & Company, 19.36 per cent; Capital Hotels, 13.14 per cent; Champion Breweries, 3.58 per cent; CWG, 16.50 per cent while Ekocorp has free float of 12.64 per cent.

Others included eTranzact International, 16.94 per cent; Geregu Power, which was listed by way of introduction in October 2022 has free float of 1.07 per cent; Golden Guinea Breweries, 8.14 per cent; Infinity Trust Mortgage, 0.84 per cent; International Breweries, 11.03 per cent; Medview Airline, 14.16 per cent; Notore Chemical Industries, 0.87 per cent; Prestige Assurance, 15.49 per cent; Tourist Company of Nigeria, 1.77 per cent; Transcorp Hotels, 5.47 per cent; NPF Microfinance Bank, 16.66 per cent; Union Dicon Salt, 2.17 per cent; Union Bank of Nigeria, 6.58 per cent while UACN Property Development Company (UPDC) has a free float of 4.87 per cent.

Market analysts noted that several deficient companies have remained on the list without resolution of the free float deficiencies, calling on the NGX RegCo to decisively deal with companies with running deficiencies for more than five years.

Stock markets maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation. Besides, it provides the general investing public with opportunity to reasonably partake in the wealth creation by private enterprises.

Companies are usually given a timeline to free up shares and cure their free-float deficiency. Failure by deficient companies to restructure their share capital at the expiration of the deadline or secure extension of the deadline may lead to delisting of their shares from the NGX.

Free float deadline is usually in deference to application by the management of a company for some period to comply with the free float. However, the company is required to provide quarterly disclosure report to the NGX RegCo on the efforts being made to fully comply by the deadline.

By the expiration of the deadline, a company is mandatorily required to have completed partial divestments or dilution of the ‘non-public’ shareholdings to free the required percentage of equity stake for public holding, unless the management of the NGX RegCo grants fresh waivers and extensions for the companies. In the extreme instance, a company with deficient public float may opt to delist its shares.

Alternatively, deficient companies may opt to move from the main board to the growth board or ASeM or in the extreme cases, opt to delist their shares from the Exchange.

Nigeria’s second certified corporate Sukuk, the Family Homes Sukuk Issuance Programme Plc (FHSIP) N20 billion Sukuk, was at the weekend listed on the Nigerian Exchange (NGX), deepening the pool of tradable alternative securities at the stock market.

Listing report obtained at the weekend indicated that a total of 20 million units of the FHSIP 14.00 per cent Series II Ijara Lease Sukuk Due 2029 worth N20 billion were listed at N1, 000 par value.

FHSIP is a special purpose vehicle (SPV) of Family Homes Funds Limited (FHFL), a quasi-government entity owned by the Federal Government of Nigeria, through the Federal Ministry of Finance and the Nigeria Sovereign Investment Authority (NSIA). It was established to impact the quality of lives of Nigerians, particularly the poor and vulnerable.

FHFL had issued the N20 billion Series II Ijarah Sukuk, to complete its N30 billion Sukuk issuance programme. In 2021, FHFL had accessed the market through its N10 billion seven-year 13 per cent Series 1 Ijara Lease Sukuk due 2028. The debut issue had recorded an oversubscription of more than twice of the issue value.

The N20 billion issuance was the second-ever certified corporate Sukuk in Nigeria. The offer had been reviewed and certified by the Central Bank of Nigeria’s Financial Regulation Advisory Council of Experts (FRACE) and also duly registered with the Securities & Exchange Commission (SEC).

FHFL had offered a seven-year fixed rate Sukuk Al-Ijarah to discerning investors through a book-building, pre-order system. Minimum subscription to the issue was  N10 million and thereafter in multiples of N1 million.

The 14.00 per cent rental distribution will be done on a semi-annual basis while the Sukuk will be repaid on the basis of amortisation of the principal repayment over the tenor of the Ijarah.

Family Homes Sukuk Issuance Programme is rated BBB+ by Global Credit Rating (GCR) and Bbb by Agusto & Co. The Sukuk issuance is rated on its own BBB+ by GCR and A+ by Agusto & Co.

The net proceeds of the N20 billion Sukuk issuance will be used to finance development of affordable homes for low income households.

FHFL’s fund raising is to support its focus on providing decent home as a pivot towards necessary comfort and security for citizens on low income. FHFL believes there is a need to bridge the infrastructural deficit of decent homes for Nigerians estimated to be at 22 million, particularly for those on low income.

As a social housing initiative promoted by the government as part of its social intervention programme; FHFL plans to invest up to N1.3 trillion in the development of 500,000 affordable homes nationwide over the long-term. In the process, this is also expected to create up to 1.5 million jobs whilst enabling homeownership.

Family Homes Funds initiative is in line with the New Urban Agenda and the United Nations Sustainable Development Goal of promoting sustainable cities and communities, reducing  poverty, promoting good health and well-being, economic growth, and reducing inequalities-Sustainable Goal No 11.

Nigerian Exchange (NGX) has listed Africa Infra Plus Fund (AIPF I), Nigeria’s first carbon-mitigating mutual fund to be quoted on the stock market.

The AIPF 1 is a N20.5 billion, naira-denominated, closed-end infrastructure fund being co-managed by Africa Plus Partners Plc and Capitaltrust Investments & Asset Management Limited.

AIPF 1’s structure is a pool of equity and quasi-equity investments in carbon+ infrastructure projects that promote sustainable development including roads, power, water supply, wastewater management, ports, and airports.

The fund also acquires the shares and other investment instruments issued by socially responsible entities carrying on infrastructure business or executing infrastructure projects exclusively.

The listing came as the NGX announced arrangements to launch a special window to be known as Impact Board to further give visibility to sustainable financial instruments listed on the Exchange.

The planned board is also expected to encourage more listings in the sustainable finance segment as part of NGX’s sustainability drive for the capital market.

Chairman, Africa Plus Partners, Anhad Narula said the fund was a sustainable infrastructure fund that specialises in carbon mitigating infrastructure investments.

According to him, the fund, whose investors include ordinary Nigerians through their pension fund administrators, is committed to investing in sustainable infrastructure businesses that align with the global energy transition and move towards cleaner sources of energy and efficiently run, sustainable infrastructure and utility services.

Managing Director, Africa Plus Partners Plc, Mr Adeniran Ajakaiye, said the listing was aimed at demonstrating the highest levels of good governance and transparency.

He said the mutual fund would continue to deliver active returns to shareholders while addressing Nigeria’s ‘missing middle’ infrastructure gap.

According to him, AIPF aims at addressing the imbalance between the need for infrastructure development and the concerns about environmental and social impact by investing in projects that meet strict ESG criteria.

He pointed out that the listing of the fund on NGX was a clear indication of the growing interest and demand for sustainable investing in Africa and the Exchange’s commitment to the same.

Chief Executive Officer, Nigerian Exchange (NGX), Mr. Temi Popoola, said the listing marked a significant milestone in the Exchange’s commitment to promoting sustainable investing and reducing the drivers and impact of climate change.

“We are proud to be at the forefront of this and look forward to more exploits as we drive growth in the capital market,” Popoola said.

As investors begin to discuss the likely implications of the upcoming presidential election, Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Mr Sam Onukwue, has emphasised the need to undertake major reforms to attract investors to the capital market.

He said security challenges, inflation rate, taxation of market instruments, especially Capital Gain Tax (CGT), are disincentives to investors and must be addressed.

According to him, government’s management of debt, funding of budget deficit, privatisation of moribund parastatals, successful removal of fuel subsidy and general stability of monetary policy amongst others will determine the investment environment this year.

“I believe that many people still want to do business with Nigeria. What they need is investor-friendly monetary policy environment. But the incoming administration should address issues such security,  inflation rate, debt servicing, removal of petroleum subsidy, managsation of parastatals such as NNPC and get it listed on a securities market rather than direct sale to core investors. We have seen a huge gap in this year’s budget and hope the government shall leverage the capital market to fund budget deficit, “Onukwue said.

In his review of the market for last year, he noted that above 20 per cent gain recorded by NGX was commendable. He added that the market would have earned higher but for the incessant review of the Monetary Policy Rate (MPR), rising inflation rate and inconsistent exchange rate that characterised investment activities in the review period.  He, however, expressed optimism that a more stable monetary policy environment will enhance investment opportunities.

“The financial market was unstable for the  larger part of 2022 as some fundamental decisions were taken by the government that impacted the market . Constant movement of the Monetary Policy Rate (MPR), forced investors to look for higher interest margin. The inflation galloped in the period and people were looking for real value. Exchange Rate also constituted a challenge as foreign portfolio investors abandoned the market while local investors dominated the market. On one hand , we can say local investors have are developing confidence in the  market but on the other, foreign investors left because they were losing money.

“Global implications of Russian invasion of Ukraine disrupted economic activities. But the market didn’t do badly despite the challenges. The impending presidential election will have significant impacts in terms of investor expectations and uncertainties. However, given the good performances of many companies in the third quarter, they may perform better. We have seen a slight decline in inflation rate, for the first time has 11 years. We hope this will be sustained,” Onukwe said.