NASD to Launch Link Notes, Private Equity Fund

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Eromosele Abiodun
The management of NASD Plc has concluded arrangements to launch link notes, market making programmes and private equity fund in the second quarter of the year.

The Managing Director of NASD Plc Exchange, Mr. Bola Ajomale disclosed this at an interactive forum with chief executive officers of participating stockbroking houses in Lagos.

NASD Plc is the promoter of the trading network that eases secondary market trading of all securities of unquoted public companies in Nigeria.

Also, Ajomale used the occasion to outline the exchange’s action plans in 2016 that will position it as a more efficient market in Africa.

As part of the plans, the exchange said it has aligned its system with consensus reached at the 2015 African Securities Exchange Association (ASEA) conference which includes positioning to benefit from active investors across the globe that are looking for potential in African markets to invest.

The NASD boss said that the exchange would tighten price structure within the year and is targeting two to three price bands for an effective price discovery.
“Regarding funds and investments wanting to come into Africa, we think that the way it is going to come in is in private equity and the funds that want to come in are looking past the macro. They are looking for multiple returns, not percentage returns.

“So, as a result, ahead of the ASEA conference which happened few months ago, we have started work on private equity side; we have committees, they are active and working. We have engaged SEC in the process and we that in few months’ time we are going to be launching the private equity fund,” he said.

According to him, the NASD has identified about 100 companies that will be prospected for listing on its platform. He added that NASD OTC is in the process of joining the ASEA and hopes to complete the process and become a full member in the second quarter.
On the performance of the exchange for the first quarter of the year, Ajomale said that 16.3 billion shares certificates have been dematrialised, while 144 million units valued at N959 million were traded.

He noted that the market slowed down after ‘a big jump in June 2015’, attributing the decline in activities to the Securities Exchange Commission (SEC)’s pronouncement that only companies quoted on the Nigerian Stock Exchange (NSE) are under its purview.

“We hope that this number will jump significantly in the next quarter, because we are hoping that SEC will correct the statement that only stocks on NSE are under its purview,” he said.
He added that the exchange would be able to launch out to high net worth investors when the index is more stable.

According to him, “We do know that we still have a market that is stochastic, and when you have such market, then you don’t have a smooth index. So, we are trying to establish a smooth index. Considering when we have a smooth index, we can then take it to the Pension Fund Administrators (PFAs) and big investors and say this is the trading over a period of time. We are trying to get a smooth index and that is why we are keeping a day count.”