By Collins Nweze
The Securities and Exchange Commission (SEC) and Bureau of Public Enterprises (BPE) are in talks with the Nigeria National Petroleum Corporation (NNPC) on getting the corporation’s subsidiaries listed on the Nigerian Stock Exchange.
SEC’s Acting Director-General Ms. Mary Uduk, made this known when she engaged the media on the sidelines of the just concluded 2019 International Monetary Fund (IMF)/ World Bank Group Annual Meetings in Washington D.C.
She said in other climes, government companies like the NNPC are listed in the capital markets of those jurisdictions, saying the proposed listing will come into force after the NNPC subsidiaries would have been restructured to meet the listing requirements of the NSE.
Ms. Uduk, who was optimistic that that the listing will happen soon, said, “for your information, the discussion on the listing of the NNPC in the market has been ongoing for a long time. I know there is a committee on listing that has been engaging the NNPC. Also, NNPC as a global company cannot list. It has to be the companies under NNPC that can list. And before that happens, those companies have to be restructured to meet the listing requirements of the capital market”.
She said the acceptability of investors is also needed. “So, I do not see anything wrong with NNPC listing on the capital market and we pray that even the engagement that the Capital Market, NNPC, BPE have been having in respect of the listing of the NNPC will one day, and soon, happen.”
On corporate governance, she said companies must have good governance structure and managed properly for them to be profitable and sustainable, pointing out that “this is even more relevant for public companies, given that ownership is separated from control.”
She said shareholders and investors must have comfort that their companies are well governed under the appointed managers. With the scorecard which now allows the Commission to assess compliance, investors are now better off.
“The companies are complying and that is boosting investor confidence. The companies now disclose their level of compliance to corporate governance practices which enhances transparency,” she said.
Also, on losses in the capital market, she said: “I would like to say that in terms of market loses, it is a global thing. It is not only in Nigeria that we are experiencing it. We are doing a number of things to get the market recover and get investors to have more confidence. For instance, in terms of innovation, we have set up a roadmap committee of Financial Technology (Fintech). And as we speak, the report of that committee will be launched later this month, and we have also set up an implementation committee”.
Ms. Uduk SEC is encouraging more issuances, and looking at listing time to market. “We are ensuring that the time that issuers come to the market to raise funds, is comparable to the time that they go to the banks to also raise funds. This is because, whether you like it or not, the capital market and banks are direct competitors. And therefore, we try to ensure that issues do not spend more than two weeks from the time they entered the market to the time the funds were raised. We try to ensure that the turnaround time is very fast”.
She said the commission was also looking at establishing the rules on e-Initial Public Offers (e-IPOs), which has already been done. “The rules are already in place, as well as the rules on crowdfunding, which will enable Small and medium Enterprises (SMEs) to be able to raise funds directly from the market. These and many others are the things we are doing to ensure that the market turnaround and the activities in the market picks up,” she said.
“We will continue to implement most of our initiatives as contained in the Capital Market Master Plan including e-dividend, direct cash settlement, multiple subscriptions, financial literacy, commodities ecosystem, among others. I will like to tell you that these, and many more, are shaping the landscape of the Nigerian capital market,” she said.
Speaking on the primary market, Uduk said some new equities issues comprising Rights, Bonuses and Global Offer of securities are ongoing.
“Some corporates have also issued bonds, also specifically, some have taken advantage of our new rules on Green bonds, global offers from Airtel, to issue this innovative product. We have equally expanded the number and value of our registered Collective Investment Scheme. For the secondary market, if you look at the equities market, especially on the Nigerian Stock Exchange, the market has lost about 16 per cent so far this year, on the back of relatively weak economic fundamentals and investors sentiments. Meanwhile, the trading statistics in the fixed income segment of the market appears relatively higher,” she said. Also, in terms of innovation, SEC has set up committee on Fintech, and also implementation committee.
According to the SEC D-G, there was need to be optimistic about market performance in the last quarter of the year, believing that some improvement in the equities segment, especially as investors see opportunities to pick low-priced stocks. As you know, even in a down market, there are still opportunities, since what is down has higher probability of rising.
On the market performance in 2019, she said the market had witnessed some relative activities in both the primary and Secondary segment of the market even as the equities market capitalization currently stands at N12.93 trillion.
“The primary market has witnessed a new trend in the last one year with the listing of the telecomm companies (MTN Nigeria) and also the recent Initial Public Offer (IPO) and dual listing of Airtel. The dual listing of Airtel signifies the interest of the foreign issuers into the Nigeria Capital market,” she said.
“Consequent to the Airtel IPO, some offshore companies are in discussion with the Commission for an IPO that will be dually listed in Nigeria and the United Kingdom. On the market trend – primary market talk – Rights issue largely in the past one year, few private placements as well as scrip issue ie bonus issue Corporate Bond issuances also recorded an increase in 2018 compared to 2017. We also encouraged the establishment of credit enhancement entity (Infra Credit an Agency giving credit enhancement for infrastructural projects),” she said.
Uduk said investors’ confidence is central to our job as the regulator of the capital market. “People must have confidence to invest, not just in the performance of the market, but that stakeholders will play by the set rules and standard and that the market is efficient. If you look at many of our initiatives, they are designed to achieve these. For instance, the e-Dividend system enables shareholders’ dividend to be paid directly into their bank accounts without the stress of dealing with physical dividend warrants and to reduce unclaimed dividend while the Direct Cash Settlement protects investors from funds mismanagement by ensuring that the proceeds of their shares sales are credited directly into their own account”.
