NIGERIA: Nigerian Stock Exchange says listing by oil and gas firm Seplat in Lagos and London likely to unleash round of initial public offerings (IPOs)

Record ID: 236570

  • Title: NIGERIA: Nigerian Stock Exchange says listing by oil and gas firm Seplat in Lagos and London likely to unleash round of initial public offerings (IPOs)
  • Date: 9th April 2014
  • Summary: LAGOS, NIGERIA (APRIL 08, 2014) (REUTERS) EXTERIOR OF THE NIGERIAN STOCK EXCHANGE BUILDING VARIOUS OF STOCK DETAILS SCROLLING VARIOUS OF OSCAR ONYEMA, CHIEF EXECUTIVE OFFICER, NIGERIAN STOCK EXCHANGE TALKING TO JOURNALIST (SOUNDBITE) (English) OSCAR ONYEMA, CHIEF EXECUTIVE OFFICER, NIGERIAN STOCK EXCHANGE, SAYING: "The Seplat IPO, they are currently doing their book building and so there's a lot of buzz in the market place about that, I think it will be the first major IPO in the market since the 2008 burst so we think that it's a good thing for our market, it could be, it could signal the opening of a window for other IPOs to come through depending on how well it does so that remains to be seen."
  • Embargoed: 24th April 2014 13:00
  • Keywords:
  • Location: Nigeria
  • Country: Nigeria
  • Topics: Economy
  • Reuters ID: LVACVNW1NVKV7MOAQNEMN22QCIE3
  • Story Text: A stock market debut by oil and gas firm Seplat in Lagos and London is likely to unleash a round of initial public offerings (IPOs) in Nigeria after they stalled in the wake of a 2008 financial crisis, the head of the country's bourse said.
    Oscar Onyema told the Reuters Africa Investment Summit he expected more oil and gas listings to follow Seplat's, which would help tackle the sector's under-representation on the Nigerian Stock Exchange (NSE).
    The sector currently makes up just 2.6 percent of market capitalisation versus 14 percent of Nigeria's newly rebased GDP.
    After Seplat, the sector will make up 5.9 percent of the bourse.
    "The Seplat IPO, they are currently doing their book building and so there's a lot of buzz in the market place about that, I think it will be the first major IPO in the market since the 2008 burst so we think that it's a good thing for our market, it could be, it could signal the opening of a window for other IPOs to come through depending on how well it does so that remains to be seen," said Onyema.
    Seplat said it had raised 500 million US dollars in its IPO and plans to list its shares in Lagos and London on April 14. The offering gives Seplat a market capitalisation of 1.9 billion US dollars.
    None of the foreign oil majors such as Shell and Exxon Mobil that have been operating in Nigeria for decades are listed. Only local firms Oando, Forte Oil, Conoil and now Seplat have listings.
    Heavyweight cement producer, Dangote Cement accounts for a third of the Nigerian bourse, followed by the banking sector, collectively making up 15 percent.
    IPOs dried up after a 2008 crash wiped more than 60 percent off the stock market's capitalisation. The index has since recovered, gaining 35 percent in 2012 and 47 percent in 2013, but IPOs are yet to resume.
    The market is down 6 percent in the first quarter, which Onyema attributed to the tapering of quantitative easing in the United States, volatile emerging market currencies and Nigeria's forthcoming elections, which had led to some pullback from foreign investors.
    "The market is reflecting reality when you take in all information so I would say we have a more efficient market today than we did previously and some of the key pieces of information that are affecting market circumstances today would include the reversal of quantitatives in the tapering, it would include the pressure that we're seeing on currencies of most frontier and emerging markets, Nigeria is no exception, the naira has been under significant pressure, it would include specific macro-economic circumstances of the country. In Nigeria, we're also going into an election circle, so then you begin to look at the fundamentals of the companies and all of that, so I think that a little pull back is not necessarily a bad thing in the context that last year, you had 47 percent return, the year before, you had 35 percent return," he said.
    Nigeria revalued its gross domestic product (GDP) on Sunday to more than 500 billion US dollars, surpassing South Africa as the continent's top economy and shrinking the ratio of stock market capitalisation to GDP to 15 percent, compared with more than 100 percent in most developed stock markets.
    "It positions us better to become the gateway to Africa, it makes it more important for foreign direct investment and foreign portfolio investment to look at Nigeria as a gateway into the continent. I think that it also does several things, the size story is a good story but what is even a bigger story is the composition and where the opportunities lie and so you may see increases in investments but in different areas, for example, we used to think that mining was a very big part of GDP, with the new numbers, it's a much smaller part and services is a much bigger part, real estate, in services, real estate, telecom seem to hold some weight so now if you're looking to make investments, it may actually shift the way you make the investment in the country," Onyema said of the rebasing.
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