Why multinationals, IOCs defy listing on NSE

Efforts by the Nigerian Stock Exchange (NSE), to woo multinational companies in the telecoms, and oil and gas sectors to list on the nation’s bourse may continue to ‘hit a brick wall’, unless government withdrew completely from private business.

More so, regulators must interface with government to create appropriate regulation, tackle liquidity problem, and review other stringent listing rules.

Capital market stakeholders, who spoke on the dearth of Initial Public Offering (IPO) in the stock market, argued that aside withdrawing from business, government must introduce fiscal and monetary policies that would stimulate private sector investment.

According to them, a deliberate policy on incentive would attract more multinational firms’ in the telecoms, and oil and gas to float IPOs, which would ultimately resuscitate the primary market segment, improve the current illiquidity position, and deepen the market.

An IPO is the first time that the stock of a private company is offered to the public. Smaller, younger companies seeking capital to expand often issue IPOs, but this can also be done by large privately owned companies looking to become publicly traded.

Commenting, the Managing Director, Seplat Petroleum Development Plc, Austine Avuru, in an interview with The Guardian explained there is need for government to come up with fiscal incentives in the areas of taxation, custom tariff structure, and robust credit facilities.
Seplat Petroleum is one of two companies that have made public offerings in the last six years.

Avuru said: “All that government needs to do is to stimulate the growth of the private sector, and they can only do so by withdrawing themselves completely from private business, and come up with both fiscal and monetary policies that will stimulate the private sector.

“For instance, what kind of customs tariff structure do you have and how much protection does it offer without offending WTO rules? Again, you look at the banking sector, how much credit is available to private sector to expand, and at what cost?

“Borrowing at 22-28 per cent cannot grow the private sector, whereas competing countries are borrowing at single digit interest rate. These are key issues; once these are tackled, you start seeing major growth in the private sector, and then you’ll see entry into the capital market.”

Although some listed firms have approached the market for rights issues to existing shareholders, but only Seplat Petroleum, and Transcorp Hotels Plc, have offered IPOs since 2013. While Seplat’s, which was a global IPO, was 100 per cent […]

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