Anxiety Grips Investors as More Companies Opt for Voluntary Delisting


By Goddy Egene

There is a fresh anxiety among investors in the Nigerian stock market as they are apprehensive that more companies may exit following a renewed move by companies to delist from the Nigerian Stock Exchange (NSE).

The NSE disclosed that two firms, Paints and Coatings Manufacturers Nigeria Plc, which got listed seven years ago and Avon Crowncaps & Containers Nigeria Plc have applied to exit the Exchange.

Both companies have entered scheme of arrangements with their respective shareholders that would lead to the delisting of the entire shares of the companies from the NSE.

THISDAY checks revealed that many investors are getting worried over the development, which they described as discouraging.

According to them, more firms may follow the route since most of them are finding it highly challenging to meet the post listing obligations.

“Besides, some of the companies have realised that one of the major reasons for listing, which is access to equity capital, is not forthcoming due to   investor apathy amidst the current economic realities.  I know of companies that got listed so as to raise cheaper funds. But that has not been achieved. Yet they are required to maintain certain minimum standards, which are quite expensive to keep. So instead of working only for the regulators, some of companies are seeing exiting as the better alternative,” a leading shareholder told THISDAY.

He expressed worries over the decision of Paints and Coatings Manufacturers that got listed seven years ago to delist, saying there must be some reasons for that decision.

“Paints and Coatings Manufacturers, for instance, may have found out that it is getting costlier to remain a listed firm without realising the initial objectives of  its  listing on the exchange. It is also worrisome that a  company like Avon Crown Caps that has been in the market for a while is exiting the market,” the investor added.

Paints and Coatings Manufacturers listed  792,914,256 ordinary shares on the NSE at N3.90 each in 2010. However, the shares have plunged below N1.00 as at the close trade last Thursday. The  company had ended its half year  to June 30, 2017 with fall of 56.8 per cent profit before tax.

Only recently, Ashaka Cement Plc voluntarily   delisted from the NSE. According to the company, its delisting became necessary as it was violating the free float provision of the exchange.

The directors explained that the  Lafarge Africa Plc currently holds 84.97 per cent of Ashaka Cement, bringing the free float that is tradable on the NSE to 15.03 per cent as against 20 per cent stipulated by the exchange.

They noted that was  not improbable that given this free float deficiency, the NSE could take enforcement action and initiate a regulatory delisting, given that the free float deficiency is not likely to be remedied, hence the decision to delist and operate as an unlisted company.