…Dangote, NNPCL debuts awaited
By Chukwuma Umeorah
The Nigerian Exchange Limited (NGX) has solidified its position as a leading hub for capital formation, attracting N5.12 trillion in fresh listings between January and November 2024.
The feat marks a monumental rise from the N183.5 billion recorded in the same period last year, highlighting a surge in investor confidence and the Exchange’s growing allure.
Beyond these remarkable listings, the NGX facilitated N2.4 trillion in equities trading and mobilized over N5.7 trillion for government and corporate entities during the same period. These achievements further cement its role as a vital player in Nigeria’s economic growth and a beacon for the African financial markets.
With a combined market capitalisation now exceeding N106 trillion, the NGX stands proudly among the top exchanges in Africa and continues to make its mark on the global stage.
The year’s strong performance in new listings can be attributed to several key market players. In March 2024, Transcorp Power Plc (TransPower) listed N7.5 billion shares at N240, a move that added N1.8 trillion to the market. Since listing, it has recorded a 49.96 per cent growth in market capitalization, which now stands at N2.69 trillion. In October, Aradel Holdings Plc, previously listed on the NASD OTC market, debuted on the NGX with a record-breaking N3.4 trillion listing, making it the largest single addition to the market in 2024.
Additionally, in November, Haldane McCall made its entrance onto the Exchange with the listing of 3.12 billion shares at N3.84, contributing N11.99 billion to the market. These developments have not only enhanced market liquidity but also demonstrated the Exchange’s ability to attract a broad spectrum of participants from diverse sectors of the economy.
However, despite these successes, 2024 has not been without its challenges, particularly concerning some anticipated listings that have yet to materialize. At the start of the year, analysts had predicted the imminent listing of major companies such as Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL), as well as several government-owned enterprises set to be privatized. The absence of these listings has raised questions about the reasons behind the delay. Industry experts have weighed in on this matter, with many citing operational and regulatory challenges as key factors preventing these companies from entering the market this year.
Mike Eze, the Chief Executive Officer of Crane Securities, pointed to the controversies surrounding Dangote Refinery, which began operations this year but has faced significant hurdles, including internal management issues and regulatory challenges. “When they came on stream, there was a lot of controversy, particularly between them and NNPC supplying them with crude oil. I believe those are some of the delaying their entry. I think they need time to stabilize before they can list. Given the circumstances, I believe they won’t be able to list in 2024, but they may well do so in the first quarter of 2025,” Eze explained.
Similarly, he offered insights on NNPCL’s market entry. “For NNPCL, the issue is largely about credibility and stability. There have been controversies surrounding the company’s operations and its governance structure. In such a situation, it would be unwise for NNPCL to rush into the market. I believe they will wait for the right moment to avoid any potential setbacks. They are likely taking this time to resolve internal issues,” he added.
David Adonri, Vice Chairman of Highcap Securities, also weighed in on the listing delays, noting that many companies are still in the process of meeting the NGX’s stringent listing requirements. “To list on the stock exchange, a company must meet a series of rigorous requirements. Companies like Dangote Refinery and NNPCL may still be in the process of gathering their documentation and meeting these requirements,” he explained. Adonri further elaborated on the complexities of the listing process, highlighting the time it takes to fulfill both local and global standards. “Listing on the NGX is a marathon, not a sprint. The requirements are not just local; they are aligned with global standards. These companies are making sure that they meet all these criteria before proceeding with their applications,” he said.
Adonri’s perspective was echoed by other market analysts, who underscored the importance of ensuring that companies meet the necessary regulatory and governance standards before listing. Despite the delays, there is a consensus that these companies will eventually enter the market once they have sufficiently addressed all prerequisites. While they are are cautious about the short-term outlook for these high-profile listings, there is a general sense of optimism about the broader market’s performance. Adonri expressed confidence that the market would remain strong through the end of 2024.
“The market is on track to end the year positively. While inflation continues to rise, the pace at which it is increasing is slowing, which is a positive sign. Investor confidence is strengthening, and economic fundamentals are improving, which will likely support sustained demand for stocks in the coming months,” Adonri remarked.
The NGX itself has remained proactive in addressing these challenges and reinforcing its role in capital formation. At the recent listing ceremony for Haldane McCall, NGX Limited CEO Jude Chiemeka reiterated the Exchange’s commitment to providing a robust platform for capital raising. “The NGX is a multi-asset exchange, not just an equity-based platform. We currently have 322 listed securities on our Exchange, which serves as a viable platform for raising capital. Year-to-date, we have facilitated over N5.7 trillion in funding for corporates and governments, apart from banks’ capital-raising activities. Our platform, with a combined market capitalization of over N106 trillion, offers significant value and opportunities for growth,” Chiemeka stated.
He also pointed to the Exchange’s international partnerships with leading global exchanges like the London Stock Exchange and Nasdaq Dubai as integral to attracting foreign investors. “These partnerships help to enhance our global appeal and bring international investors to the Nigerian capital market. Additionally, the introduction of advanced digital platforms has further improved the accessibility of the market, allowing investors from across the world to participate,” he added.
As the year draws to a close, stakeholders have commended the NGX resolution in its goal of fostering investor confidence and expanding its offerings to attract more listings and capital-raising activities. They note that the progress made in 2024, reinforces the Exchange’s pivotal role in shaping Nigeria’s economic landscape.
The Chairman of NGX Group, Umaru Kwairanga had reaffirmed that the capital market was one of the most remarkable tool in achieving President Bola Tinubu’s vision of a $1 trillion economy. He highlighted The NGX’s strategic focus on “ enhancing its infrastructure, broadening investor access, and maintaining a global outlook.”