Download NSE scraps second-tier securities market, seeks stakeholders support

NSE scraps second-tier securities market, seeks stakeholders
support
As part of efforts to revive small and medium enterprises investment
market, the Nigerian Stock Exchange (NSE) has scrapped the secondtier securities market and amended some of the existing pre-listing
rules. It is now known as Alternative Securities/Private Placement
Exchange (ASEM/PRIPEX) with effect from December 9, 2009.
The usefulness of the second-tier securities market has continued to
dwindle with performance below expectations in terms of profitability
and return on investment. Also, trading activities in this sector is so
low that so far its contribution to the total market capitalization is less
than one percent. The approval to go ahead with the name change has
been given by the Securities and Exchange Commission (SEC). Funsho
Fatobi, deputy general manager/head, ASEM/PRIPEX, said the
platform being proposed by the Stock Exchange will provide unrivalled
access to companies, many of which may be at a stage of
development where a listing on the Exchange Main Board is not yet
appropriate, as well as give opportunities to companies interested in
retaining their status as private companies to raise funds through
private placement and become quoted on the ASEM/PRIPEX
subsequently.
The Exchange believes that through this platform, the number of listed
companies will improve the earnings of The Exchange and provide
opportunities to raise funds for further growth. Fatobi noted that most
companies that raised funds through private placement between 2005
and 2008 had promised investors that the securities being offered will
be listed on the Nigerian Stock Exchange on completion of the issue
exercise, unfortunately this has not been the case.
As a result, he said huge sums of money have been left unaccounted
for in the hands of these business promoters in addition to the fact
that there is no exit window for investors to trade the securities
bought from the private placements. “The ASEM/PRIPEX will assist in
solving these twin problems”, he said. The ASEM/PRIPEX is billed to
serve diverse stakeholders and will be made up of various market
players which include companies (issuers), issuing house/sponsoring
broker, market specialists, investors, advisers, the NSE and SEC.
Companies coming on board this platform have been assured that they
will gain many benefits enjoyed by experienced companies with full
listing on the main market, including access to pool of capital,
enhanced profile and increased status, credibility and integrity. For the
initial 180 days of take off, the stock exchange is waiving its
application or entry fee. Meanwhile, stakeholders in the Nigerian
capital market have been asked to team up and work in harmony for
the full recovery of the market from the impact of the world financial
crisis.
Ndi Okereke-Onyiuke, director general of the Nigerian Stock Exchange
at a joint national workshop for capital market correspondents, said
the Nigerian market is just recovering from the debilitating effects of
the global financial meltdown, hence the need for all stakeholders to
come together and help in reviving it. Okereke-Onyiuke noted that
consumers of media reports are growing in leaps and bounds; as such
they need timely and explicit information to take position. “The
expectation of investors, foreign or local, from the media is basically to
disseminate information that would enhance investment decisions.
This may be difficult except the journalist himself is well informed, as
no one can give what he does not have,” she said.
MODESTUS ANAESORONYE
BUSINESSDAY June 7, 2010