The bid by the Nigerian Stock Exchange (NSE) to get multinational oil and telecommunications companies operating in the country to list on the Exchange will not see the light of the day if the exchange does not make effort to deepen the stock market and relax its listing rules. The Managing Director and Chief Executive Officer of Seplat Petroleum Development Company Limited, Mr. Austin Avuru said the present situation does not give any benefit to the international corporations.
Avuru made this observation while presenting a paper titled, “Spurring the next wave of listings: Telecoms, Oil and Gas companies, challenges and possibilities, at the Capital Market Solicitors Association forum Wednesday.
He stated that the primary limitation of the NSE was its low debt of liquidity, adding that an average daily trade value of N2 billion ($13 million) cannot provide liquidity to sustain a few oil and gas producing companies.
He said: “A $2.5 billion company like Afren require a minimum float of $625 million. Therefore, investors will be looking for a much more liquid Exchange to provide them the comfort of easy exit whenever they want to.”
He said some of the Exchange’s rules, notable of which include the requirement for five years financial statement, immediately exclude upstart companies who need the market the most.
“The solution to both limitations would seem to lie in dual listing. For the oil and gas industry, the London Stock Exchange (LSE) has a huge appetite and is highly liquid. The main board listing requires only three years audited accounts while an Alternative Market or AIM listing even waives that requirement.
“With the right approach to the NSE and the Securities and Exchange Commission (SEC), one prospectus can be prepared for both the NSE and the LSE and some of the stringent NSE requirements can be waived. A dual listing will on the LSE and the NSE will do a few things for a Nigerian Independent. The strictly regulated and highly liquidLondonmarket will provide the funds needed for rapid expansion as well as build corporate governance structures needed for sustainability and competitiveness, “he said.
