The Nigerian Stock
Exchange (NSE) targets 500 companies for initial public offerings over the next five years as Africa’s second-largest bourse seeks to attain $1tn market capitalisation by 2016.
The Tide source quoted the Director-General, Securities and Exchange Commission (SEC), Ms. Arunma Oteh, as saying the NSE expects five companies to start trading their shares by the end of the year.
Oteh, who spoke in an interview in London, did not, however, identify the businesses, according to Bloomberg.
The bourse needs oil and gas, power and telecommunications companies to list stock to meet its market-value objective, she said.
Oteh said, “There are a number of large, significant companies that are preparing to come to the market. Power producers needing funds to cover spending needs are expected to list at some point, while talks are being held with telecoms companies on encouraging them to trade their shares.”
The NSE’s All Share Index gained 33 per cent this year, compared with a 1.3 per cent decline in the MSCI Emerging Markets Index, for a market capitalisation of $74bn, excluding exchange-traded funds and depositary receipts.
The nation’s economy, the continent’s second largest after South Africa, which also has the largest stock and bond markets, may expand 6.75 per cent next year, compared with an estimate of 6.5 per cent in 2013, according to the Minister of Finance, Dr. Ngozi Okonjo-Iweala.
The Head of Research at Lagos-based Vetiva Capital Management Limited, Pabina Yinkere, said, “It is an ambitious target. The NSE has to list large corporations. There has to be incentives to list and economic growth. The equity investment climate globally has to be right and favourable to the country.
“Some factors that will support the target are global in nature and outside the control of the NSE, making the realisation even more challenging.”
While Nigeria’s Lagos-traded stocks also rallied last year, rising 35 per cent, the gains didn’t translate into more initial public offerings.
The number of listed companies declined to 194 in 2012, from 198 in the previous year, according to stock exchange data.
The benchmark equities gauge of Africa’s largest crude producer is the 10th best performer among 94 indexes tracked by Bloomberg this year and fourth best in Africa after the key measures of Ghana, Kenya and Zambia.
Improved corporate governance standards and a consistent approach to market regulation will encourage more companies to sell shares, Oteh said.
A dual listing planned by an oil exploration and production company will be “defining” and may encourage others to follow, she said.
The Nigerian regulator approved the listing and is expecting a consent by next month from the other exchange, Oteh said, declining to give details other than to say that the company has a track record of acquiring fields from international oil producers and making them viable.
The Chief Executive Officer, Financial Derivatives Company, Mr. Bismark Rewane, said the goal of increasing the number of listings from the 193 securities on the all-share index was only attainable if “there are incentives.”