Trading session at NSE
By Goddy Egene
Some high networth individuals are planning to take over some of the underperforming listed companies instead of going through the process of listing fresh companies on the Nigerian Stock Exchange (NSE), THISDAY check have revealed.
While some firms have been doing well by meeting post-listing and regulatory requirements of the NSE, others have been performing below expectation.
The NSE recently introduced a compliance status called X-compliance, which indicates the level of compliance to post-listing requirements.
Through the X-compliance, the exchange has been able to expose some firms that are yet to render their audited accounts. Some of them had been unable to render their accounts as far back as financial years ended 2006 and 2008.
However, instead of seeing such firms as worthless, market sources told THISDAY that some investors are already taking advantage of the X-compliance information and are planning to acquire some of the companies.
A source in one of the leading investment banking firms said some of such investors had approached them to start the process that would lead to the acquisition of any of the underperforming firms.
“Investors who do not want to go through the rigours of listing a fresh companies but are willing to have their firms quoted on the exchange, are targeting some of the companies classified by the NSE as performing below listing standard(BLS).Some of the companies are in good sectors and may be going through one challenge or the other. If the owners are willing to relinquish total control for fresh investors to come in, such firms would definitely bounce back. I can tell you there are investors who are planning to inject funds and get then revived,” the source said.
According to the source, his firm has already been given the mandate to approach the owners of some of the companies with the view to negotiating an acquisition deal.
In its X-compliance report as at last Monday, the NSE classified about 17 firms as BLS. According to the exchange, a firm gets BLS tag for non-compliance with the post-listing rules such as late submission of financial statements and unauthorised publication among others.
For instance, Union Dicon Salt Plc, Capital Oil Plc, Jos International Breweries Plc and Stokvis Nigeria Plc got BLS tag for non-rendition of their audited accounts for 2010 financial year.
Others that were similarly classified as BLS for non-rendition of accounts are Lennards Plc (2009 accounts); Nigerian Sewing Machines Plc and Golden Guinea Breweries Plc (2006 accounts) and Afroil Plc (2008).