Oando, Five Others to Cut NGX Capitalisation by N459bn

The plans to delist from the Nigerian Exchange Limited of at least six companies will wipe about N459bn off the market capitalisation of the exchange.

The companies that have indicated interest in delisting from the local bourse this year included energy company, Oando Plc, consumer goods companies, Glaxo SmithKline Consumer Nigeria Plc and PZ Cussons Nigeria Limited.

Others include Union Bank of Nigeria, Capital Hotel and Coronation Insurance. Their exit will result in a N459.65bn reduction in the market cap when completed.

Oando in April revealed plans to delist from the NGX after the company’s core investor, Ocean and Oil Development Partners Limited, proposed to acquire the shares of its minority shareholders at the rate of N7.07 per unit.

Meanwhile, at its 44th Annual General Meeting held on November 6, the issue of the delisting was not mentioned even as shareholders approved the cancellation of the unissued ordinary shares of the group in compliance with Section 124 of the Companies and Allied Matters Act 2020 and Companies Regulation 2021. Oando’s market capitalisation stood at about N128bn as of Monday.

The chairman emeritus of the Independent Shareholders Association of Nigeria, Sunny Nwosu, at the time of the announcement, slammed the company and said shareholders of Oando, who have not been paid in years, now have to deal with the acquisition of their shares.

GSK with its plans to delist from the market and shut down its operations in Nigeria will cost the NGX N19.19bn in market value.

The woes of the minority investors’ community were compounded when another multinational, PZ Cussons, said it was exiting the market and offered to pay N21 per unit for its shares. On Thursday, the offer was increased to N23 per unit.

The NGX announced the full suspension of the trading of Capital Hotels shares on November 1, in preparation for the delisting of the securities of the company in line with obtained approval. As of October 31, the last day its shares were traded, Capital Hotels had a market capitalisation of N9.55bn with its shares priced at N3.02 per unit.

In May, Titan Trust Bank Limited, the core investor in Union Bank of Nigeria, announced its plans to acquire the shares of minority shareholders in the bank at the rate of N7.00 per share. When the delisting is completed, the NGX will shed about 193bn from its market cap.

In July, Coronation Insurance Plc said that it received an offer from Coronation Capital (Mauritius) Limited to acquire shares of the company at 65kobo per share and subsequently delist from NGX. The market cap of the insurance firm as of Monday was N17.27bn with its shares priced at N0.72 per unit.

Some shareholders, who spoke to The PUNCH, lamented the effect of the exit of the multinationals and other companies on their portfolios and the general economy.

Speaking with The PUNCH, the President, Noble Shareholders Solidarity Association, Matthew Akinlade, said, “I think the regulatory authorities just have to improve their performance because a lot of these vital industries are getting off the NGX. These exits will have an impact on the fate of the minority shareholders.

“It is not a good omen for the economy. I think the regulators have to be careful. Even the regulators in terms of sanctions, I think are being overbearing. Yes, they should be fined but not such a huge amount that would erode their profitability.”

Speaking with The PUNCH, the Vice Chairman of the Board at Highcap Securities Limited, David Adonri, said that the planned delisting is not a welcomed development as it shrinks the size of the capital market and may affect its ability to serve as the barometer for the economy.

On possible impact on investors’ confidence, Adonri said, “It may not be affected if investors in the delisting companies are appropriately paid off. However, what Oando is proposing as an exit payment to investors will cause unimaginable losses to investors who bought the shares several years ago. The exit payment that investors will receive can be reinvested in other securities. It may not diminish the value of investor’s portfolios.”

 In his comments, the Chief Executive Officer of Wyoming Capital and Partners, Tajudeen Olayinka, said that the delisting plans would affect the size of the market relative to the size of the Nigerian economy, and by extension, the depth of the market.

November 16, 2023