Demutualised for Economic Development

The demutualisation of the Nigerian Stock Exchange has positioned it to provide a better platform for capital formation for economic growth, writes Goddy Egene

Since March when the Nigerian Stock Exchange (NSE) completed its demutualisation following the receipt of approval from the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC), it has been excitement among stakeholders in the capital market.

After over 60 years of operating as mutual exchange, it has demutualised to become a profit-making and limited liability company. This led to a new structure comprising a non-operating holding company, the Nigerian Exchange Group Plc (NGX Group) with three operating subsidiaries. The subsidiaries are: Nigerian Exchange Limited (NGX Limited), which is the operating exchange; NGX Regulation Limited (NGX REGCO), the independent regulation company; and NGX Real Estate Limited (NGX RELCO), the real estate company.

Considering the new vision, mission and core values of the exchange, expectations are very high that stakeholders would get a better deal from the market in the near term and beyond. The NGX Group’s vision is “to be Africa’s preferred exchange hub”, while its mission is “to provide investors and businesses a reliable, efficient and an adaptable exchange hub in Africa, to save and to access capital.”

The demutualisation has received positive assessment and comments as stakeholders believe the exchange is now positioned to perform a more sustainable role in the economic growth and development of the nation.
The Chairman of NGX Group, Otunba Abimbola Ogunbanjo, said: “Successful demutualisation was one of my fundamental objectives when I assumed the presidency of the exchange. The SEC’s decision to approve the NSE’s demutualisation plans brings this aspiration to a successful conclusion in a process that included the passage of the Demutualisation Act through the National Assembly.

“We are elated that this milestone has been achieved as we celebrate the 60th anniversary of the commencement of trading at the exchange and now look forward to the future public listing of its shares on NGX Limited.
“On behalf of the NSE, I would like to warmly thank all those that have worked assiduously to achieve this watershed event on our journey to make the NSE a multifaceted exchange that extends across various markets and geographical regions.”

Also commenting, the Group Chief Executive Officer (GCEO) of NGX Group, Mr. Oscar Onyema said: “The Nigerian capital markets should play a role commensurate with Nigeria’s status as Africa’s largest economy. At the exchange, we have a vision that the new group will become the premier exchange hub for Nigerian businesses and for the African economy.

“We are implementing a series of measures towards this goal, demutualisation being a critical milestone. The completion of demutualisation is a truly significant moment, and we welcome the new possibilities that have opened up for us today.”

On his part, the Chairman of Association Securities Dealing Houses of Nigeria (ASHON), Chief Onyewenchukwu Ezeagu, said it 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 said.

Speaking in the same vein, President, Chartered Institute Stockbrokers (CIS), Olatunde Amolegbe, said the long awaited 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 to follow the demutualisation,” Amolegbe said.

Also speaking, the Executive Director, NOVA Merchant Bank, which has a securities trading subsidiary, Funke Okoya, said the demutualisation of the NSE had birthed a new vista of opportunity for the Nigerian capital market.

According to her, the ownership structure should infuse greater efficiencies and enhanced operational bandwidth, which will ultimately help to drive liquidity, expand the scope of 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.

Adding his voice, the Managing Director, Highcap Securities Limited, Mr. David Adonri, said the demutualisation was remarkable because the idea was muted over 10 years ago.

“From now, the NSE has become a company which is driven by profit motive. Instead of ordinary and dealing members, it has shareholders now. Erstwhile dealing members are now clients of the exchange.

“The NSE can henceforth exploit all avenues for raising capital, instead of relying on the meagre contributions of its members. It is a big transformation wherein the possibilities are endless,” he said.

Adonri explained that the transformation would be monumental, saying that its relationship with stakeholders would change and become more commercially oriented.

“Its activities will become taxable and it can be acquired or merged with any other company as situation arise. The holding company may be publicly quoted.

“In which case, its shares can be traded in the capital market. This will open it up as an investment outlet that will help deepen the capital market.

“This development can increase investors’ confidence in the capital market considering the enhanced corporate governance that will ensue. It is hoped that the new NSE will be competitive and also be more efficient in service delivery,” he declared.

Apart from Onyema, who is the GCEO of the holding firm, experienced and competent CEOs have also been appointed for the other subsidiaries, who will ensure the realisation of new vision and mission statements and meet the high expectations of all stakeholders.

For instance, CEO of NGX Limited, Mr. Temi Popoola, is a successful C-suite leader whose unique blend of business acumen, financial expertise, global market growth and operational insight has earned him a reputation built on verifiable career achievements.

A Wall Street trained investment banker, Popoola joined the exchange from Renaissance Capital (Rencap) where he was MD and CEO for West Africa.

The CEO of NGX REGCO, Ms. Tinuade Awe was an Executive Director, Regulation at the NSE. She also served as the General Counsel and Head of the Legal and Regulation Division as well as Council Secretary before becoming an Executive Director. Prior to the exchange, Awe worked with the United Nations in The Hague and Geneva as well as the New York offices of global law firm, Simpson Thacher & Barlett and Banwo & Ighodalo in Lagos, Nigeria.

Having shown so much resilience and contributed to the economic growth through provision for capital to the federal and state governments and corporates, it is the believed that with its new structure, the NGX Group has the capacity to provide more funding given its innovations and strategies slated for execution.

Leading corporates such Dangote Cement Plc, BUA Cement Plc, Seplat Petroleum Development Company Plc, Zenith Bank Plc, Access Bank Plc, FBN Holdings Plc, United Bank for Africa Plc, Guaranty Trust Bank Plc among others have raised funds from the market to boost their operations.

Last year, for instance, governments and corporates raised about N4.015 trillion from the market using the exchange’s platform. Apart from companies that benefitted by raising funds, investors also had a good outing last year despite the covid-19 pandemic.

The market delivered a return of over 50 per cent, which was the best global performance.

When the pandemic hit the globe last year, the exchange took steps to preserve the health and safety of its stakeholders by activatingits Business Continuity plan which saw the transition to working from home and remote trading in response to the spread of the virus. The exchange maintained seamless working and trading operations, experiencing zero down time.

The exchange leveraged its existing digital assets to ensure a continuous flow of information and activity in the market and continues to explore creative solutions to enhance stakeholders’ experience during that period.

Consequently, all brokers have access to the requisite platforms to trade remotely and seamlessly including FIX Protocol, X-NET and VPN. Also last year, the exchange released an upgrade to its Data Portal, X-Data Portal; Issuers’ Platform, X-Issuer; and its whistleblowing portal, X-Whistle.
Ahead of its formal launch at the end of April, NGX Group has unveiled its new corporate brand identity and website.

According to the exchange, the NGX brand identity follows a monolithic brand architecture, which will facilitate the formation of any new subsidiary by leveraging existing brand equity. The identity is inspired by the arrows of the stock exchange ticker tape as well as monetary exchange between a buyer and seller.

Onyema said influenced by the dynamism and resilience of our market in both good and challenging times, the new identity, which builds “on its rich heritage, reflects who we are today, our ambitions for the future, and our resolve to deliver superior value to our stakeholders. As we step into the NGX era, we remain committed to achieving the highest level of competitiveness, both in African and global capital markets.”

According to him, together with the new vibrant, modern and responsive website, NGX Group offers an enriched user experience.

“Accessible via ngxgroup.com, information about the group and the various subsidiaries are independently situated but featured as one website.

“With its centralised home page and clearly delineated tabs for each subsidiary, the new site delivers relevant content in a a clean and organised way to provide visitors easy access and navigation to all the information they require,” the exchange said.