Government To Relinguish Stake In NSE After Demutualisation
WITH the Demutualisation of the Nigerian Stock Exchange, the government may relinguish 51 per cent of its share to the Nigerian public. To this end, stakeholders in the capital market have applauded the move saying it would help to restore the confidence of the local investors that were most hit by the 2008 recession.
Besides, they argued that the exercise would also reduce to the barest minimum, the over dependence on foreign investors in the nation’s capital market.
Demutualisation of the stock exchange is aimed at transforming it into Public Limited Liability Company, and by implication a profit-making organisation to be listed on itself and any other Exchange around the world.
In demutualisation, the members give up their rights and receive shares in the company in return, which the (now former) members may then sell.
Demutualization happens most often when a stock exchange owned by its members goes public.
The exercise, when completed, would give the investing public the opportunity to trade on the shares of the Exchange, like any other quoted company.
Where it is implemented, the exercise usually results into members of the public holding 51 per cent of the demutualised company’s equity capital.
According to them, when membership of the NSE is opened to majority of Nigerians and they are called upon to own shares in the stock market, it would help to publicise the activities in the market, give investors a ‘sense of belonging’ and more local investors would be encouraged participate.
According to the stakeholders, with demutualisation, the ownership structure of the NSE would be properly put in place to ensure good corporate governance, which would boost investor’s confidence in the organization.
The President of the Progressive Shareholders Association of Nigeria, Boniface Okezie, said the exercise would attract more local and retail investors into the stock market, if carried out in an ‘all inclusive’ and transparent manner.
“If the process will carry all Nigerians along and one person will not own Nigerian Stock Exchange, convert it to his own private estate, if the whole thing will go round to all Nigerians, that will foster growth because it will woo more local investors to the market.
Stock exchange is non-governmental, non-profit organisation, so if it is demutualised and quoted as Plc, they will begin to make money because the private people now own it.
To Augustine Ofonagoro, the Managing Director of Stanwal Securities Limited, demutualisation would go a long way to reduce overdependence on foreign investors, because it would attract local investors to the Nigerian stock market.
“As NSE demutualizes and sell its own shares to the people, more people will know what is happening here and they will bring all the money they are stocking else where here, because they will believe that the place belongs to them. Right now, many of them think it is a government enterprise.”
According to him, while previous management of NSE tried to create awareness for the activities at the Exchange, the interim administration have been focusing more on foreign investors.
“This does not urgur well for the country, because all they are looking at is their own pocket. They are not interested in the development of Nigeria. If anything goes wrong in their country, like in the last global financial meltdown, they would sell off their investment in Nigeria and the Nigerian Stock Market would be at the receiving end.’’
The former Director-General, the Securities and Exchange Commission (SEC) Ms. Arunma Oteh, had assured stakeholders that the exercise would be carried out in a transparent manner. She explained that the process would be transparent to enable the owners of the Exchange get real value on investment at the end of the exercise.
According to her, demutualisation was essential for the future of the Exchange, adding that it was important for the process to be carried out in a manner that would allow stakeholders to have confidence in the system.