Nine delisted firms reduce NSE’s capitalisation by N165.11bn
A total of nine companies were delisted from the Nigerian Stock Exchange in 2019. This wiped N165.11bn off the market capitalisation.
The latest data obtained from the NSE showed that two of the companies were delisted due to regulatory reasons, one was due to a merger and six delisted purely on voluntary reasons.
Skye Bank Plc and Fortis Microfinance Bank Plc were delisted for regulatory reasons while Diamond Bank Plc merged with Access Bank Plc.
The remaining seven companies applied for delisting voluntarily.
Great Nigeria Insurance was delisted from the NSE on January 25, 2019 following the company’s voluntary application to delist.
The company’s delisting wiped N1.91bn off the total market capitalisation.
The shareholders of the company had in July 2018 approved the company’s plans to delist from the NSE.
The Chairman, Great Nigeria Insurance, Mr Bada Aluko, said the company’s decision to duelist from the NSE was as a result of no trading on its shares for over five years.
He said neither the company nor shareholders were benefiting from the continued listing as shares were not getting any exit opportunity and investments had been locked up while the company was bearing unnecessary cost in complying with its listing obligations.
A member of the Independent Shareholders Association of Nigeria, Mr Sunday Akinsoye, while speaking at the company’s Extraordinary General Meeting in 2018, said the continuous fining of the company by the NSE was destroying the investment of minority shareholders.
He noted that shareholders were unhappy with the regulator, adding that if money paid as fines was paid as dividends or invested, shareholders would be better for it.
In September 2019, Great Nigeria Insurance listed its shares on the NASD OTC Securities Exchange Plc, thereby opening up a window for trading in its shares after its exit from the NSE.
On April 1, 2019, the NSE delisted Diamond Bank from its daily official list.
Diamond Bank was acquired by Access Bank in December 2018 while it planned to complete the transactions of the merger fully in the first half of 2019.
On April 1, Diamond Bank was fully merged with Access Bank to build a new entity while retaining the name of Access Bank with a logo that took the form of Diamond Bank.
The N56.05bn market capitalisation of Diamond Bank was added to that of Access Bank.
Newrest ASL Nigeria Plc in February voluntarily applied to the NSE to delist all its shares.
On May 15, the NSE delisted the shares of the company from its daily official list, which wiped N4.34bn off the market capitalisation.
While the NSE said the company’s application to delist was as a result of its inability to meet up with the 20 per cent free float requirement, Newrest ASL said its decision to delist was because “the illiquidity nature of the capital market rendered the primary corporate objective of the listing to raise capital and provide liquidity unattainable.”
The firm said there was a significant drop in its trading volumes from 78,094,753 units in the 2017 financial year to 9,029,052 units in the 2018 financial year.
It said neither the company nor its shareholders were benefitting from the continued listing on the NSE.
First Aluminium Nigeria Plc, on July 31, had its shares delisted from the NSE, taking N844m off the total market capitalisation.
The company explained that its decision to delist from the NSE was because shareholders were not benefiting from the continued listing and were not getting exit opportunities.
It added that its shares had continued to trade at a significant discount to the intrinsic value.
Skye Bank, following the revocation of its licence by the Central Bank of Nigeria in September 2018, was delisted from the NSE on August 21, 2019.
The CBN Governor, Mr Godwin Emefiele, announced it had revoked the operating licence of Skye Bank, saying the assets and liabilities of the bank would be taken over by a new entity, Polaris Bank.
It said the licence revocation was due to the inability of its shareholders to adequately recapitalise the bank after the 2016 intervention.
The delisting wiped N10.69bn off the market capitalisation of the NSE.
The total market capitalisation depreciated further by N11.80bn as Fortis Microfinance Bank had its shares suspended from being traded on the floor of the NSE and delisted for failing to adhere to standard corporate governance and extant post-listing requirements.
Fortis Microfinance Bank also experienced protracted governance crisis and internal breakdown of management controls, which ultimately led to the resignation of its interim Managing Director, Mrs Bunmi Lawson.
The CBN revoked its licence and the bank was finally liquidated by the Nigeria Deposit Insurance Corporation.
Following the approval of its shareholders to sell the company to Olam, Dangote Flour Mills was on November 18 delisted from the NSE, taking N111.25bn from the market.
On December 31, the NSE announced that it approved the voluntary delisting application of Continental Reinsurance Plc and A.G. Leventis Nigeria Plc.
Continental Reinsurance’s delisting saw the market capitalisation drop further by N22.82bn while A.G. Leventis’ exit wiped an additional N1.46bn from the total market capitalisation of the NSE.
A.G. Leventis’ exit was on the back of its purchase by shareholders of Boval S.A. on behalf of Leventis Holding S.A. and Leventis Overseas Limited.
Continental Reinsurance had applied for delisting as a result of the plans to transfer the various subsidiaries of the group to Continental Reinsurance Investments.
This would enable Continental Reinsurance Nigeria to shore up its balance sheets and capital required for maintaining and expanding the business.
The Managing Director, Afrinvest Securities Limited, Mr Ayodeji Ebo, said because of the prolonged laws in the capital market, there had not been any capital raise in the equities market as people had been using the debt market to raise funds.
He noted that as a result, companies were not seeing the benefit of listing.
Ebo said, “It is more of fiscal policies trying to drive demand. If we see increased demand from fund managers, companies may begin to nurse the idea of starting with rights issue and then public offers.
“If the demand is really not there and capital is not available, people would be looking at more of fixed income investment. When we see this more, we would not even have new listings not to talk of capital raise.
He said it was not a surprise that companies were opting for delisting as investor demand was weak.