The shares of MTN Nigeria, Airtel Africa Plc and BUA Cement Plc have recorded significant growth in value reflecting the benefits of listing on the Nigerian Stock Exchange, writes Goddy Egene
The Nigerian Stock Exchange has been a major contributor to the development of the nation’s economy by facilitating access to capital for corporate and the government. While corporate bodies access funds from investors to run their operations, government raise funds to develop infrastructure that have assisted the growth of the economy.
As part of the capital market ecosystem that facilitates capital formation, the NSE provides the platform for companies to list their shares and enjoy many benefits aside raising long-term capital.
Over the years, companies have enjoy these benefits and remained listed. Also, despite the benefits, some listed companies have opted out of the exchange citing various reasons.
By and large, the benefits of getting listed on the NSE are more than the demerits.
For instance, listed companies have access to growth-enabling capital as they can raise capital to finance strategic business objectives, both at the time of admission as well as through subsequent capital events, providing the stability required to achieve growth aspirations.
Also, listed companies enjoy a wider range of financing options and access to a diverse global investor base and large pool of public funds to finance growth. These companies are also able to use their quoted shares as currency to support acquisition and growth objectives.
Another positive for listed entities is that they benefit from a higher profile and visibility engendered by increased coverage from research analysts, investment banks, the media and investors, as well as potential inclusion in market indexes.
Being listed enhances the company’s status and credibility with business partners, customers and employees owing to the rigorous disclosure and governance standards required.
In the same vein, listed companies enjoy enhanced share liquidity and valuation because a public quotation provides an avenue for placing an objective market value on the business, as well as creating a liquid market for trading the company’s shares to unlock value.
In spite of the above benefits, which are among many others, some companies still feel reluctant to list their shares, while some that have listed exit. However, given the bull run that has lifted the market by 44.5 per cent, there are three companies that must now be celebrating their decision to list their shares on the exchange, given the value they have received so far.
These companies are MTN Nigeria Plc, which got listed in May 2019, Airtel Africa Plc that got admitted in July 2019 and BUA Cement Plc that got listed in January 2020. The value of these companies have witnessed a significant growth that ordinarily would not have taken place if their shares were not listed and investors given access to trade them.
For example, a total of 20.4 billion shares of MTN were listed at N90 per share, which a capitalisation of N1.836 trillion. The shares have appreciated to N160 per share, lifting its market capitalisation to N3.257 trillion as of trading last Thursday before the Christmas break.
To date, investors who bought the shares of MTN at N90 per share, have gained a capital appreciation of 77 per cent. During the listing of the shares, the Chief Executive Officer (CEO) of the NSE, Mr. Oscar Onyema said the listing would promote liquidity for MTN Nigeria, enhance its value and increase transparency.
He said: “We are delighted to welcome MTN Nigeria to the exchange. The listing is a promising development in the country’s telecommunications sector and we encourage other players in the sector to explore the different opportunities in the capital markets for raising long term capital. As a listing platform of choice, today’s listing will add to our bouquet of diverse investment offerings to the public.
Having MTN Nigeria listed in our market is a testament of the exchange’s commitment to building a dynamic and inclusive market and creating channels for sustainable investment.”
In his comments, the Chief Executive Officer, MTN Nigeria, Ferdi Moolman, said the company evolved from an ambitious start-up at the genesis of a new and emerging industry, to a business that is able to touch lives in every corner of Nigeria.
“We have established a sustainable platform for growth, from which we are able to meet the growing and dynamic needs of our customers, our communities and our country. This platform has been built through a sustained focus on customer-centric delivery, striving to ensure that every subscriber gets as much value for their money as possible. We are grateful to customers for their loyalty, and to our people, our partners and our regulators for the opportunity to continue to contribute to Nigeria’s growth story. We are only beginning to tap into the opportunities that connectivity enables and are fully focused on investing to connect every Nigerian, and to make social innovations like mobile electricity and high impact mobile solutions in education, healthcare and agriculture available in communities everywhere.”
On its part, Airtel Africa Plc, which is the parent company of Airtel Nigeria, had its 3.758 billion shares listed at N363 per share with a market capitalisation of N1.364 trillion. The company shares have soared to N851.80 per share, translating into a capital gain of 135 per cent. Also, its market capitalisation has jumped to N3.201 trillion.
Onyema had hailed the decision of Airtel Africa to list last year, saying it reaffirmed the company’s long-term commitment to expanding opportunities and providing everyday services to Africans and Nigerians in particular.
“This listing serves to deepen the telecoms and technology sector for investors and provides an opportunity for a wider group of Nigerians to be part of the African telecoms growth story. The listing is a promising development in Africa with Airtel Africa being the second company to have its ordinary shares listed on both the London Stock Exchange (LSE) and NSE. This gives credence to the successful partnership between the two exchanges. I encourage similar situated companies to explore the different opportunities for raising capital on the Exchange’s platform,” Onyema.
The Chief Executive Officer of Airtel Africa, Raghunath Mandava, had said the company was delighted to be listed on the main board of the exchange.
“This is an exciting time for Airtel Africa in the 14 countries it operates in and an important milestone in our development as a leading provider of telecommunications and mobile money services in Africa,” he said.
Also speaking, the Chief Executive Officer and Managing Director of Airtel Nigeria, Segun Ogunsanya, said: “Nigeria is a great place for business and Airtel Africa remains committed to building a leadership position here. Investors have been interested to hear our story, and importantly they have been interested enough to invest in our business and are now ready to share the future with us.”
For BUA Cement, which is the West Africa’s second largest cement company, the listing was historic because it was done after the conclusion of the merger of two entities owned by the Group- Cement Company of Northern Nigeria and Obu Cement Company.
A total of 33.863 billion shares of the company were listed in January 2020 at N35 per share with a market capitalisation of N1.185 trillion. However, the shares have appreciated by 71 per cent to N60 per share while the market capitlisation has increased to N2.032 trillion.
Speaking at the listing of BUA Cement, the CEO of the NSE, Onyema, had applauded the founder of BUA Group and Chairman of BUA Cement, Abdul Samad Rabiu, for bringing BUA’s expanded cement business to the exchange it as a “show of confidence in the value the NSE offers.”
The Managing Director of BUA Cement Plc, Yusuf Binji, had said BUA Cement was poised to add even more value to the Nigerian economy as a whole through this listing.
“Over the past few years, we have significantly ramped up capacity and currently boast the most efficient and integrated operations in the Nigerian Cement Industry. This new publicly listed company will continue to deliver exceptional value to all stakeholders in the foreseeable future.”
Binji said the merger of the two companies provided a compelling opportunity to capture significant synergies and create value for the benefit of the shareholders of both companies in the form of stronger competitive position of the enlarged company, economies of scale, enhanced operations and administrative efficiencies that will accrue.
Rabiu had said the decision to merge was primarily motivated by the to ensure that the company was well positioned to grow and expand in the Nigerian cement industry.
“The merger with Obu Cement will create an entity with increased production capacity. We are of the opinion that the proposed merger will create a platform where significant synergies can be obtained for the benefit of our shareholders, employees, customers, distributors, suppliers and the broader economy,” he said.
Rabiu explained that the merger will increase the production capacity of the enlarged company to 8.0 million mtpa.
“It is anticipated that in addition to meeting the demand from customers in our core regions in the country, the enlarged company would be positioned to distribute its products in new geographical markets, creating the potential for additional shareholder value creation,” he said.
The chairman noted that the merger would provide opportunities for significant cost savings and improved operational efficiencies by streamlining operations and optimising the use of combined resources.
On economies of scale, Rabiu said: “The merger will provide a platform where the enlarged company benefits from economies of scale in procurement, distribution and manufacturing of the products offered to our customers. We expect the benefits accruing from greater economies of scale to accrue to many stakeholders.”
According to him, CCNN shareholders will become shareholders of a larger and highly profitable entity, stressing that synergies created as a result of the merger would create additional value for shareholders.
“Besides, the enlarged company will create a platform for further investment that will have a positive impact on the communities where the operations of the companies are present as well as for the economy as a whole,” the foremost industrialist declared.
He said this consolidation would mark the culmination of the first phase of the BUA mid-term strategic plan for its cement businesses, which currently include four cement plants spread across Obu Cement Company and the CCNN.
“We intend to continue creating value for the benefit of shareholders of the consolidated company by maintaining their focus on outperforming the Nigerian cement industry across key indices through a laser-like commitment to excellent products and service delivery, operational efficiency as well as maintaining leadership position in their home markets,” Rabiu said.