The Nation Newspaper

Tag: Stock Exchange

  • ‘Why MTN listing is delayed’

    MTN Nigeria’s planned listing on the Stock Exchange would be actualised when its alleged outstanding $2billion tax issue is resolved.

    The explanation came yesterday when MTN’s Chief Executive Officer, Ferdi Moolman, addressed  the media on several issues, including the firm’s 2018 financials and its expansion drive, among others.

    He said MTN Group  plans to push ahead with the initial public offering of its Nigerian unit once the compay resolves a $2 billion tax dispute in the country.

    Top executives of MTN present at the briefing, including Corporate Relations Executive, Tobechukwu Okigbo and Chief Financial Officer, Kunle Awobodu,  took turns to offer explanations on the impending listing.

    “When the tax matter has been settled, “the board can assign a value to the company and we will do an IPO,”  Okigbo said, pointing out that “it is difficult to put a value on it when there is such an issue.

    ”There was a lot of work that we did on the listing and our target was to list in 2018. We are a private company at the moment and we need to change to a public company before we can list,” Okigbo said, adding, “we need to send our directors for training to comply with SEC and NSE requirements to be able to list and a lot of work went on at the backend on the listing. Then, the CBN issue happened. The truth be told, if we had listed while the CBN issue was on, we would have been negligent.

    “That is because we would have gone to offer our shares to the public when we had an issue at hand with the CBN that was substantial. If I remind you, they were talking about $8 billion. So, I can’t go and list and offer my shares to the public if I have this thing hanging over my neck. We thank God we were able to resolve this on 24th of December.

    “So, we are working towards the listing and we plan to do the listing before the end of first half 2019, or probably before the end of quarter three. There is a clear drive in doing the listing. It is something we have always wanted to do,” Okigbo stated.

    Nigeria’s Attorney General, Abubakar Malami, had accused MTN of not paying all its taxes in September, and the two sides have yet to reach an agreement. A court hearing on the matter is scheduled  for March 26 in Lagos.

    The parent company has said it would list its local unit on the Nigerian Stock Exchange by June this year. “We anticipate it in two phases, listing by introduction and IPO eventually,” once the tax issue is cleared, Awobodu said, with Moolman affirming that the listing by introduction could take place in April or May.

    Notwithstanding the lingering tax and IPO issues, MTN has received an approval in principle to start mobile-payment services in Nigeria, the biggest of its 20 markets around Africa and the Middle East. Financial services is a key growth market for the carrier due to a scarcity of banks in many parts of the continent and rising take of smart phones and data services.

    Also, MTN will start selling a new smart phone in Nigeria, costing about N8,000  which the company, Moolman, said, is  seen as a way of increasing data revenue, MTN shares rose 1.4 percent to 96.18 rand at the close in Johannesburg, the fifth consecutive day of gains since it announced a 15-billion rand ($1 billion) disposal plan last week. That included online retailer Jumia Technologies AG, in which MTN is the biggest shareholder, which announced IPO plans in New York on Tuesday.

  • Stock Exchange to list 30-year FGN Eurobond

    The Nigerian Stock Exchange (NSE) will tomorrow list five tranches of the Federal Government (FGN) Eurobond, deepening the sovereign debt market. The new listings will bring FGN Eurobonds listed on the Exchange to a total of eight.

    The five Eurobonds include the 7.143 per cent 12-year $1.25 billion FGN Eurobond; 7.696 per cent, 20-year, $1.25 billion FGN Eurobond; 7.625 per cent, seven-year, $1.118 billion FGN Eurobond; 8.747 per cent 12-year, $1 billion FGN Eurobond and 9.248 per cent 30-year, $750 million Eurobond. The Eurobonds were issued under Nigeria’s newly established Global Medium Term Note programme.

    The listing is in line with the Federal Government’s drive to re-balance the country’s debt portfolio, following the Debt Management Office’s (DMO) issuance of five Eurobonds in 2018; the dual tranche which was issued in February and subsequently the triple tranche Eurobonds released in November 2018 respectively.

    The Eurobond issuances are expected to spur private sector participation in the Nigerian capital markets as domestic investors stand to gain increased access to instruments in the secondary markets and widened opportunity for portfolio diversification.

    The Eurobonds are also expected to facilitate the inflow of foreign investment from international fund managers seeking to diversify their portfolios from both asset class and geographical perspectives, augments the domestic savings base.

    They are expected to lead to more sustainable growth and development of the economy.

    This five-tranche listing of the FGN Eurobonds comes on the trail of recent Federal Government bond listed on the Exchange, including N10.69billion, five-year, Federal Government Sovereign Green Bond at coupon rate of 13.48 per cent in July 2018 and the N100 billion, seven-year, Federal Government Ijarah Sukuk with a rental rate of 16.47 per cent on Tuesday, April 10, 2018.

  • Stock Exchange delists Great Nigeria Insurance

    The Nigerian Stock Exchange (NSE) at the weekend delisted Great Nigeria Insurance (GNI) Plc share capital, ending more than 13 years of public quotation and listing on the main board of the equities market.

    The delisting was sequel to the request for voluntary delisting by the board of GNI, which opted to revert to a private unquoted company. GNI was listed on the NSE in October 2005.

    The NSE had  approved application for voluntary delisting by GNI, after the insurance company insisted on delisting its shares from the Exchange. GNI had been struggling to meet the stringent corporate governance practices at the stock market. The insurance company subsequently sought  approval to delist its shares.

    As part of the delisting process, Insurance Resourcery and Consultancy Services Limited (IRCSL), which owns majority equity stake in the company, had offered to pay cash consideration of 50 kobo per share for every share surrendered by minority shareholders. The exit price of 50 kobo was based on the highest price of 50, which GNI had traded in the last six months.

    The board of the company, however, assured that shareholders that intend to continue to be a member of an unlisted GNI shall be free to remain and they have no obligation to receive the exit consideration.

    In an explanatory statement on the proposed delisting, the board of the company noted that the voluntary delisting would shield it from any enforcement action that may arise as a result of the outstanding free float deficiency at the NSE.

    The board also noted that over the last five years, there has been little or no trading activity on the shares held by the minority shareholders, pointing out that shareholders were not benefiting from the continued listing as they were not getting any exit opportunity and their investments had been locked up and they found it difficult to dispose of their shareholding.

    The board added that the company has neither benefitted from the continuing listing as its shares continue to trade at a significant discount to the intrinsic value.

    It also said the delisting will afford the company opportunity to further an imminent corporate restructuring exercise to take advantage of emerging opportunities, noting that the company may consider  re-listing on the Exchange in the future if the market conditions are favourable.

    According to the company, the voluntary delisting would not occasion loss of business opportunities as there are similar unlisted insurance companies that are commanding significant share of the insurance market.

  • Stock Exchange reviews free float’s listing requirement

    Nigerian Stock Exchange (NSE) authorities have launched a review of the market’s free float requirement, one of the stock market’s main listing requirements.

    The review comes on the heels of exclusive report by The Nation that several quoted companies had failed to meet the free float requirement.

    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 five 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.

    NSE Chief Executive Officer, Mr Oscar Onyema, said the Exchange was reconsidering the free float requirement for companies quoted on its main board with a view to providing a two-option requirement that should make compliance easier for the companies.

    According to him, the review is expected to provide two alternatives of percentage number of shares or actual value of market capitalisation for companies on the main board, similar to the provisions on the premium board. All the existing defaulters are listed on the main board, where more than 95 per cent of quoted companies are listed.

    Under the existing rules, companies listed on the premium board are required to have 20 per cent free float or more than N40 billion of their capitalisation in the hands of general investing public. Companies on the main board are required to have a minimum free float of 20 per cent of their market capitalisation, implying that 20 per cent of the companies’ shareholdings must be available for minority retail shareholders. However, companies on the Alternative Securities Market (ASeM) are required to have 15 per cent free float.

    Onyema said actual value would also be determined as alternative free float for the main board, noting that free float requirement is an important part of the stock market.

    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.

    The Nation had reported that 18 quoted companies have less-than-required minimum volume of shares for public trading, a major infraction that may adversely affect liquidity and efficient price discovery on the companies.

    The overconcentration easily makes the companies’ share prices susceptible to manipulation and detracts from stock market’s objectives of wealth distribution, liquidity and efficient pricing.

    According to the report, the defaulting companies included Union Bank of Nigeria, which currently has a free float of 14.94 per cent; Capital Hotel, 2.99 per cent; Great Nigerian Insurance, 16.0 per cent; AG Leventis, 11.64 per cent; Interlinked Technology, 14.50 per cent; Infinity Trust Mortgage, 3.50 per cent; Transcorp Hotels, six per cent; Ekocorp, 11.84 per cent; Champion Breweries, 17.17 per cent; Caverton Offshore Support Group, 17.30 per cent; The Tourist Company of Nigeria Plc, 3.58 per cent and e-Tranzact International Plc, which has a free float of 10.06 per cent.

    Others were Aluminium Extrusion, 17.73 per cent; Union Dicon Salt, 18.0 per cent; Austin Laz & Company, 5.51 per cent; CWG, 15.97 per cent; Global Spectrum Energy Services, 7.01 per cent and Portland Paints & Product Nigeria (PPPN), which has a free float of 14.57 per cent, 5.43 percentage points below the 20 per cent minimum requirement.

    Authorities at the Exchange have already tagged the companies with a red alert of non-conformity with the requisite listing and corporate governance requirements. With the “Below Listing Standard (BLS) tag, the deficient companies would have to undertake capital restructuring to reduce the overconcentration and free more shares for the general retail investing public.

    Alternatively, deficient companies may opt to move from the main board to the ASeM or in the extreme cases, opt to delist their shares from the Exchange. Chellarams, which had been quoted on the main board migrated to the ASeM to cure its free float deficiency. Two companies-Great Nigeria Insurance and Tourist Company of Nigeria have also applied for voluntary delisting of their shares.

    The report indicated that many of the deficient companies have been given up till 2020 to restructure their share capital and comply with the minimum free float. 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 NSE.

    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 NSE on the efforts being made to fully comply with 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 NSE grants fresh waivers and extensions for the companies. In the extreme instance, a company with deficient public float may opt to delist its shares.

  • Stock Exchange suspends trading on Great Nigeria Insurance

    Authorities at the Nigerian Stock Exchange (NSE) yesterday placed full suspension on the shares of Great Nigeria Insurance (GNI) Plc, disallowing any further trading or price movement on the insurance company.

    The full suspension was sequel to the approval of the voluntary delisting of GNI, which had opted to revert to a private unquoted company.

    The NSE had recently approved application for voluntary delisting by GNI, after the insurance company insisted on delisting its shares from the Exchange. GNI had been struggling to meet the stringent corporate governance practices at the stock market. The insurance company subsequently sought for approval to delist its shares.

    As part of the delisting process, Insurance Resourcery and Consultancy Services Limited (IRCSL), which owns majority equity stake in the company, had offered to pay cash consideration of 50 kobo per share for every share surrendered by minority shareholders. The exit price of 50 kobo was based on the highest price of 50 at which GNI had traded in the last six months.

    The board of the company however assured that shareholders that intend to continue to be a member of an unlisted GNI shall be free to remain and they have no obligation to receive the exit consideration.

    In an explanatory statement on the proposed delisting, the board of the company noted that the voluntary delisting will shield it from any enforcement action that may arise as a result of the outstanding free float deficiency at the NSE.

    The board also noted that over the last five years, there has been little or no trading activity on the shares held by the minority shareholders, pointing out that shareholders were not benefiting from the continued listing as they were not getting any exit opportunity and their investments had been locked up and they found it difficult to dispose of their shareholding.

    The board added that the company has neither benefitted from the continuing listing as its shares continue to trade at a significant discount to the intrinsic value.

    The board of directors said the delisting will afford the company opportunity to further an imminent corporate restructuring exercise to take advantage of emerging opportunities, noting that the company may consider re-listing on the Exchange in the future if the market conditions are favourable.

    According to the company, the voluntary delisting will not occasion loss of business opportunities as there are similar unlisted insurance companies who are commanding significant share of the insurance market.

  • Stock Exchange lifts suspension on Resort Savings & Loans

    •Posts N44m loss

    The Nigerian Stock Exchange (NSE) has lifted suspension on trading in the shares of Resort Savings & Loans Plc, after the mortgage banker submitted its relevant financial statements to the Exchange.

    The NSE had on July 5, 2017 suspended trading in shares of Resort Savings and 16 other companies for failing to adhere to best corporate governance and extant post-listing requirements that quoted companies submit their periodic financial statements and reports within stipulated timelines.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than 90 calendar days, or three months, after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 calendar days after the end of the relevant period.

    Not less than 83 per cent of quoted companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31. While March 31 is usually the deadline for submission of annual report for companies with Gregorian calendar business year, the deadline for the quarterly report is a month after the quarter.

    The NSE stated that Resort Savings has submitted its outstanding audited and interim financial statements to the Exchange.

    Key extracts of the interim report and accounts of Resort Savings for the nine-month period ended September 30, 2018 showed that the company recorded considerable growths in earnings. Turnover rose by 51 per cent from N350.13 million in 2017 to N529.95 million in 2018. Interest income increased by 67 per cent from N314.35 million to N525.46 million. Loss before and after tax reduced from N152.24 million in 2017 to N43.56 million in 2018.

    Milost Global Inc-an American private equity firm, had recently appointed a Nigerian escrow agent and placed funds in escrow account to back up its investment in Resort Savings & Loans. Milost had indicated it plans to invest $250 million, about N76.5 billion, on Resort Savings & Loans. Milost, combining its traditional equity and debt approach, would be staking $100 million as equity capital and $150 million as debt capital.

     

  • Investors lose N295b in opening trades at stock exchange

    INVESTORS lost N295 billion in the first three consecutive trading sessions of the New Year as political risks continued to moderate investors’ appetite for quoted shares.

    The All Share Index (ASI) – the value-based common index that tracks share prices at the NSE, dropped consecutively from its year’s opening index of 31,430.50 points to close weekend at 30,638.90 points.

    Aggregate market value of all quoted equities also declined from its 2019’s opening value of N11.721 trillion to close weekend at N11.425 trillion.

    With this, the average year-to-date return for the three-day trading session so far in 2019 stood at -2.52 per cent, equivalent to a loss of N295 billion.

    Sectoral analysis showed a market-wide sell pressure as fund managers rebalanced their portfolios.

    The NSE Industrial Goods Index recorded the steepest decline of 4.48 per cent. The NSE Banking Index followed with a drop of 2.98 per cent. The NSE Consumer Goods Index declined by 2.41 per cent.

    The NSE Insurance Index depreciated by 1.41 per cent. The NSE Oil and Gas Index posted a negative return of -0.79 per cent while the NSE 30 Index, which tracks the 30 most capitalised companies at the exchange, dropped by 2.70 per cent.

    There were 45 losers against 22 gainers during the week compared with 52 gainers and 18 losers recorded in the previous week.

    FCMB Group led the decliners with a drop of 16.49 per cent to close at N1.62. GlaxoSmithKline Consumer Nigeria followed with a loss of 15.86 per cent to close at N12.20. Access Bank declined by 14.71 per cent to close at N5.80. Stanbic IBTC Holdings dropped by 12.68 per cent to close at N46.50 and Dangote Flour Mills declined by 12.41 per cent to close at N6 per share.

    On the positive side, Custodian Investment led the advancers with a gain of 16.19 per cent to close at N6.10. Julius Berger Nigeria followed with a gain of 15.67 per cent to close at N23.25. Vitafoam Nigeria rose by 12.50 per cent to close at N4.50, Niger Insurance and Linkage Assurance chalked up 9.09 per cent each to close at 24 kobo and 72 kobo respectively.

  • Stock Exchange demotes Diamond Bank, NEM, Continental Re

    Authorities at the Nigerian Stock Exchange (NSE) have removed Diamond Bank Plc, NEM Insurance Plc and Continental Reinsurance Plc from its high-ranking corporate governance index.

    In a statement yesterday, the NSE stated that the companies would cease to be on its Corporate Governance Index (NSE CGI) with effect from today, January 1, 2019.

    The Exchange indicated that the removal of the duo of Diamond Bank and NEM Insurance was due to observed corporate governance lapses while Continental Reinsurance is being removed due to the company’s quest to voluntarily delist its shares from the Exchange.

    “The Index Governance Committee of the Exchange resolved to remove NEM Insurance from the NSE CG Index following the suspension of the CGRS rating of the company by the Steering Board of the CGRS on Monday, November 19, 2018. Additionally, in view of the recent governance issues with Diamond Bank, the Index Committee has decided to remove the bank from the NSE CG Index,” the Exchange stated.

    The Corporate Governance Rating System (CGRS) is a joint initiative between the NSE and the Convention on Business Integrity (CBi). It was developed to rate the corporate governance and integrity practices of all companies listed on the Exchange. The CGRS was launched on November 3, 2014.

    The NSE CG Index tracks the performance of CGRS-rated companies using their market capitalisation, free float and corporate governance rating scores. The Index is reviewed on a bi-annual basis during which other companies that have become CGRS-rated in the interim may be added to the Index or companies that have had their ratings suspended or withdrawn may be removed.

    The NSE CG Index is expected to be an important tool for investors keen on investing in well-governed companies as well as corporates eager to distinguish themselves on the ground of governance.

    The Nation had earlier reported that the NSE had launched an engagement process to review the compliance of Stanbic IBTC Holdings Plc and Diamond Bank Plc to high-level corporate governance standards expected of top-rated quoted companies.

    The review was sequel to the fines imposed on Stanbic IBTC Bank and Diamond Bank by the Central Bank of Nigeria (CBN) for complicity in alleged illegal repatriation of $8.1 billion by MTN Nigeria Communications Limited. Diamond Bank was also subsequently embroiled in boardroom squabble that saw resignation of some non-executive directors.

    To be certified, the CGRS rates quoted companies through three processes including independent verification; self – assessment by the company; certification of director awareness of their fiduciary duties; and a corporate integrity assessment where perceptions of actual company behaviour are sought from internal and external stakeholders.  A score of 70 percent and above for both the company and individual directors is required for certification.

  • Stock Exchange strengthens Investors’ Protection Fund

    The Nigerian Stock Exchange (NSE) has strengthened the governance of its Investors’ Protection Fund (IPF) with a new framework that outlines a broad-based board and competencies.

    The NSE had in 2012 inaugurated its IPF, in line with the Investment and Securities Act (ISA).

    Part XIV of the ISA requires the Exchange to establish and maintain an investors’ protection fund to compensate investors with genuine claims of pecuniary loss against dealing member firms resulting from insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade points; and defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the dealing member firm in its course of business as a capital market operator.

    A new governance and management framework approved by the Securities and Exchange Commission (SEC) on December 5, 2018 for the NSE IPF indicated that the fund will be managed by a nine-member board, drawn from major stakeholders in the capital market.

    According to the new framework, the board shall consist of a maximum of nine members including a representative each from dealing member firms, NSE, Central Securities Clearing System Plc, SEC, Institute of Capital Market Registrars, one person representing institutional investors, one person with proven integrity and knowledgeable in the capital market matters, one person representing registered shareholders association and one person who shall be a legal practitioner knowledgeable in capital market matters.

    Under the new rules, the board members shall be appointed by the Exchange, subject to the approval of SEC, for an initial term of four years, renewable for a further term of four years only.

    The board is IPF’s highest organ. It is responsible for the management of the IPF and shall hold, manage and apply the fund in accordance with the provisions of the IPF rules and the ISA.

    To manage the fund, the board is empowered to engage such number of staff as it may deem necessary for the efficient performance of its functions, set up sub-committees to assist in the discharge of its functions, in particular for the purpose of determining the eligibility of an investor to receive compensation and the amount payable; and appoint a management sub-committee.

    The board may also by resolution delegate to any sub-committee appointed by it all or any of its powers. Any power, authority or discretion so delegated by the board shall be exercised by members forming a majority of the sub-committee as if that power, authority or discretion had been conferred on a majority of the members of the sub- committee.

    The board may remove any member of a sub-committee and may fill any vacancy while a decision of the sub-committee of the board shall  have no effect until it is ratified by the board.

     

  • Stock Exchange lifts suspension on Great Nigeria Insurance

    The Nigerian Stock Exchange (NSE) on Monday lifted suspension on trading in the shares of Great Nigeria Insurance (GNI) Plc, after the insurance company submitted its relevant financial statements to the Exchange.

    The NSE had on July 5, 2017 suspended trading in shares of GNI and other companies for failing to adhere to best corporate governance and extant post-listing requirements that require quoted companies to submit their periodic financial statements and reports within stipulated timelines.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than 90 calendar days, or three months, after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 calendar days after the end of the relevant period.

    Not less than 83 per cent of quoted companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31. While March 31 is usually the deadline for submission of annual report for companies with Gregorian calendar business year, the deadline for the quarterly report is a month after the quarter.

    The NSE stated that GNI, “which was amongst the companies suspended has submitted its outstanding financial statements to the Exchange” citing the rules that state that “the suspension of trading in the issuer’s securities shall be lifted upon submission of the relevant accounts provided the Exchange is satisfied that the accounts comply with all applicable rules of the Exchange”.