Plans are underway for the listing of ordinary shares of the holding group for the Nigerian Stock Exchange (NSE) and its emergent subsidiaries for public trading at the stock market.
The listing of the shares is expected to be the climax of the ongoing demutualisation (conversion ), which is expected to close in the third quarter.
Sources said the shares of the six decade-old Exchange will be made available for public trading this year, noting that the timeline of activities will run smoothly with the receipt of all major regulatory approvals.
According to the sources, the listing may be done by way of introduction, a process that allows the scheme shares from the demutualisation of the Exchange to be listed for public trading without initial public offering (IPO).
Under demutualisation, NSE, as a non-profit, member-owned mutual company, limited by guarantee is converting to a public limited liability company with issued share capital and shareholders.
A non-operating holding company, the Nigerian Exchange Group (NGX Group) Plc has been created as the parent company for the NSE and its operating structures. NGX Group has three operating subsidiaries – Nigerian Exchange Limited (NGX), the operating exchange; NGX Regulation Limited (NGX REGCO), the independent regulatory arm; and NGX Real Estate Limited (NGX RELCO), the real estate company – forming the group. All the four entities have been duly registered at the Corporate Affairs Commission (CAC).
According to the plan, the emergent holding group, Nigerian Exchange Group Plc, will list its entire issued share capital of 2.0 billion ordinary shares of 50 kobo each by way of introduction on the Nigerian Exchange Limited, which will take over the trading function of the NSE.
Under the rules at the Exchange, immediate post-demutualisation shareholders of the emergent holding group may need to make initial shares available to create liquidity in the stock. Listing by introduction is a listing method for companies that desire to list its primary share capital on the Exchange, without prior public issuance.
As part of the process, the council of the NSE recently announced the chief executives of the emerging companies after the conversion of the NSE.
The incumbent Chief Executive Officer of NSE, Mr Oscar Onyema, will lead the Nigerian Exchange Group Plc as Group Chief Executive Officer. Temi Popoola, a Chartered Financial Analyst (CFA) and Chief Executive Officer, West Africa, Renaissance Capital, will lead Nigerian Exchange Limited as Chief Executive Officer. Incumbent Executive Director at NSE, Tinuade Awe, will be the Chief Executive Officer of NGX Regulation Limited.
According to the scheme of arrangement for the conversion, the post-demutualisation shareholders’ base will consist of 255 institutional shareholders and 177 individual shareholders.
The post-demutualisation shareholding arrangement was arrived at by converting the existing dealing members of the Exchange to institutional shareholders and ordinary members to individual shareholders.
Shareholdings will be on equal basis in the immediate conversion period with each institutional shareholder holding 6.01 million ordinary shares of 50 kobo each while each individual shareholder will hold 2.44 million ordinary shares of 50 kobo each.
Thus, each institutional shareholder will hold 0.3 per cent equity stake while each individual shareholder will hold 0.1 per cent equity stake, in line with the current membership-share conversion ratio of 78 per cent for dealing members and 22 per cent for ordinary members.
The NSE will transit into a non-operating holding company with an authorised share capital of 2.5 billion ordinary shares. About 2.0 billion ordinary shares of 50 kobo each are expected to be issued in the immediate period of the conversion.
The NSE will transfer its securities exchange licence and other assets necessarily required to carry out the securities exchange function; which will include human resources, securities exchange function related contracts, the trading facilities comprising of the trading floors, work stations, telephones and other office equipment such as cabinets and others, quotation board, stock price electronic display device, stock printers, inquiry display equipment and other assets to Nigerian Exchange Limited pursuant to the scheme.
According to the scheme, the demutualised NEG will take off with authorised share capital of N1.25 billion comprising of 2.50 billion ordinary shares of 50 kobo each, which will be registered with the Corporate Affairs Commission. The NEG will subsequently set aside 2.0 billion ordinary shares of 50 kobo each as issued share capital, which will be registered with the SEC.
A total of 40.08 million ordinary shares, representing 2.0 per cent of the proposed issued shares of NEG will be set aside for allotment to parties that may lay claims to entitlement to shares in the demutualised Exchange.
This was pursuant to the provisions of the Demutualisation Act 2018. The apportionment of 2.0 per cent as the claims review shares is based on an analysis of the probable quantum of shares that would be required to settle each claim. However, each claimant will be expected to provide irrefutable evidence of membership or circumstance that confers such claim of ownership.
However, in the event the claims review shares are insufficient to satisfy successful claims, additional shares will be allotted from the demutualised Exchange’s authorised share capital.
A total of 1.96 billion ordinary shares, representing 98 per cent of the issued shares, the balance of the issued shares following the reservation of the claims review shares, will be apportioned between dealing and ordinary members on the basis of a ratio of 78:22, respectively.
With the approval of the scheme, all assets, liabilities and undertakings including real property and intellectual property rights of the NSE- with the exception of the securities exchange licence and all assets and appurtenances in relation to the securities trading business of the NSE – shall be retained by NEG.
