Stakeholders in Nigeria’s capital market have hailed the final approval given by the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC) for the demutualisation of the Nigerian Stock Exchange (NSE), saying it will lead to the growth of the market and the economy.
The approval by SEC and CAC has led to the completion of the demutualisation process of the exchange, transforming it into a profit-making and limited liability company.
With the demutualisation, a new non-operating holding company, the Nigerian Exchange Group Plc (NGX Group), has been created with three operating subsidiaries.
The subsidiaries are: Nigerian Exchange Limited (NGX Limited), which will be the operating exchange; NGX Regulation Limited (NGX REGCO), the independent regulation company; and NGX Real Estate Limited (NGX RELCO), the real estate company.
Reacting to the development, the Chairman of Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyewenchukwu Ezeagu, said the demutualisation of the NSE was one of his happiest moments.
“The development is one of my happiest moments as the Chairman of ASHON, having along with other critical stakeholders delivered on the mandate to demutualise the exchange. Demutualisation will enhance the effective transformation of not only the NSE but also the entire securities ecosystem in particular,” Ezeagu stated.
President, Chartered Institute Stockbrokers (CIS), Mr. Olatunde Amolegbe, also said the approval would herald a new vista in the growth trajectory of the NSE.
“This is a process that already enjoys the support of all market stakeholders because of the immense benefits that we expect that it will bring to investors and the Nigerian economy at large. We expect increased innovation and growth among market participants,” Amolegbe added.
The Executive Director, NOVA Merchant Bank, Ms. Funke Okoya, said the demutualisation of the NSE had birthed a new vista of opportunities for the capital market.
According to her, the ownership structure should infuse greater efficiency and enhanced operational bandwidth, which will help to drive liquidity, expand its operations and deepen the market.
“The NSE is undoubtedly a critical element in the Nigerian capital market and plays a critical role in the development of the market. With our subsidiary as a broker/dealer on the NSE and of course a shareholder of the new NGX Group, I look forward to new offerings, efficiency gains and renewed service orientation from the leadership, with optimism that such would be complementary to the growth strategies of our securities trading subsidiary and other capital market operations, including asset management and investment banking,” Okoya said.
A former Council Member of the NSE and Managing Director/CEO of APT Securities and Funds Limited, Mallam Garba Kurfi, said the demutualisation would lead to greater investor participation in the governance of the exchange and unlock capital for stockbrokers who may decide to trade their shares for liquidity.
Another stockbroker, Mr. Samuel Oguntayo, said as a profit-making company, the exchange would be restructured to become more agile and improve on its innovativeness and capitalise on new income opportunities in order to create value for shareholders.
Mallam Oguntayo added that the corporate governance principle governing other corporations will come into play in the running of the NSE and ensure transparency.
“Besides, there will be more products and services in the market and this could be other streams of income for operators,” Oguntayo said.
An investor and shareholder activist, Mr. Boniface Okezie of Progressive Shareholders Association of Nigeria said the demutualisation would bring benefits to all stakeholders in the market.
“It is going to be a healthy competition in the capital market because the platform will become a listed entity at some point. And so, as everyone among its staff will put in their best to make sure people who invest reap their fruits of their investment because they will now compete with those other companies also listed in on the platform.
“Even foreign companies who want to do business here will take us serious going forward,” he said.
According to him, the exchange will also become more business-oriented and as a private driven organisation interference from the Securities and Exchange Commission (SEC) for instance, will reduce.
Earlier yesterday, the NSE had said with the approvals by the SEC and CAC, it could now activate its Transition Plan (TP)to a new operational structure and holding company.
NSE stated that upon operational launch, the group’s new brands, including a new website, will be unveiled, and the group will be in a position to execute its strategic vision.
“Stakeholders, including our new valued shareholders will benefit from the group’s enhanced corporate governance framework, access to capital to fund strategic developments and more globally competitive exchange,” NSE added.
It said the approvals would enable the shares of NGX Group Plc, which have been registered with the SEC, to be allotted to the membership pursuant to the court-approved scheme of arrangement.
Demutualisation of the NSE has been seen as pivotal because it creates new strategic opportunities that will enable the group realise its vision of becoming Africa’s leading capital market infrastructure provider.
The creation of a holding company and a new capital structure will also enable NGX Group Plc to form new dynamic relationships, drive strategic partnerships and gain capital-raising flexibility.
The NSE members approved at its last AGM the listing by the introduction of NGX Group Plc on NGX Limited.
(Arise News)