Promoters of the proposed Lagos Commodities and Futures Exchange (LCFE) have concluded the private placement to raise N500 million initial capital for the take-off of the new Exchange. The application list for the private placement closed on Monday, November 27, 2017.
A source close to the Association of Stockbroking Houses of Nigeria (ASHON), which is spearheading the establishment of the LCFE, said that the group would not extend the application date for the private placement, in a major indication that existing subscriptions might have met the target of the private placement.
The proposed Lagos Commodities & Futures Exchange is expected to trade in currency, commodities, oil and gas and solid minerals.
The Memorandum of the Private Placement indicated that 500 million ordinary shares of N1 each were offered to investors at N1 per share. Stockbroking firms would be given preference in the allocation of the shares.
The net proceeds of the private placement will be used to fund the start-up and operational take-off costs, administrative and personnel costs of the LCFE as well as leasing of a trading platform for the trading of qualifying derivatives including options, futures and spots among others.
Several potential investors have already indicated interest in the LCFE, which they described as a laudable project that fits into the Federal Government’s diversification programme with special emphasis on agriculture.
Chairman, Association of Stockbroking Houses of Nigeria (ASHON), Mr Patrick Ezeagu said ASHON had worked tirelessly with its financial advisers, consultants, auditors and accountants to put together the Strategic Business Plan and Information Memorandum for the LCFE in order to provide investors with the basis for informed investment decision.
Vice Chairman, Association of Stockbroking Houses of Nigeria (ASHON), Mr Akin Akeredolu-Ale added that in order to ensure a seamless take-off of the Exchange, the association had hired different consultants to confirm the depth of the market in terms of absorptive capacity for commodity and futures trading and models to run the Exchange in terms of strategy and the structure of the board to ensure compliance with corporate governance requirements.
According to him, all reports indicated that the proposed Exchange would be run professionally and profitably.
He noted that the private placement makes provision for strategic investors because the new Exchange requires huge capital outlay and know-how.
“The Exchange is a capital intensive project. It also requires investment in high technology.
We need one or two institutional investors that have huge capital and also technology. Some institutional investors that meet these criteria are already showing interest. But by the structure that we shall adopt, there is no fear of marginalization of minority shareholders,” Akeredolu-Ale said.