The Alternative Securities Market (ASeM) of the Nigeria Stock Exchange (NSE) is beginning to make some movement in the quest to attract small and medium-sized companies to list on the platform. BusinessDay has learnt that more companies are now considering offering their shares to the public through this specialised board.
The Alternative Securities Market is a specialised board of the Nigerian Stock Exchange which is dedicated to emerging businesses, particularly Small and Mid-sized companies with high growth potential.
Sources close ASeM said: “There are strong indications that more companies have commenced the process of listing, with more IPOs and listings expected in 2014.”
It was further gathered that McNichols Consolidated plc, a listed company in consumer goods, subsector will be opening its Public Offering in this first-quarter (Q1) of 2014.
Indeed, transactions on the company’s shares on Wednesday resulted to its unit price closing at N1.43 on the Nigerian bourse.
As part of the Self Regulatory Organisation’s (SRO) efforts to attract more companies to list on this segment of the market, the Exchange has made flexible the requirements for admission to ASeM, to accommodate a wide universe of emerging businesses.
They include medium term (two years) comprehensive business plan, in which a company must have been in operation for at least two years; and date of last audited accounts must not be more than nine months.
Also for a company to list, it is required that the public would hold a minimum of 15 percent of each class of equity securities; promoters will retain 50 percent of shares pre-IPO for 12 months; the number of the public shareholders would be at least 51 for equity shares; application fee for new or additional listing is N100,000; while annual fee is N200,000 (total fee for new listing – N300,000).
This is in addition to the continuing obligation requirements of the NSE’s listing, disclosure & transparency rules; submission of quarterly, semi – annual and annual statements. Annual certification on adherence to corporate governance is required; and companies are required to have a designated adviser for as long as they are listed.
BusinessDay also learnt from a management staff of the Exchange that while the NSE has a lot of companies who want to list on ASeM, “we have found out that most of them are not meeting the basic listing requirements.”
Since its launch in April 2013, market watchers have noticed how growth potentials in ASeM are constrained by limited awareness on developments around the specialised board.
The market couldn’t attract the much needed growth and recorded a negative growth of 0.24 percent in 2013 despite claims by the NSE that it had through the ‘ASeM Platform,’ sensitised Small and Medium Enterprises (SMEs) and made comprehensive presentations at various SME Association fora, “to further increase awareness on accessing the capital market through ASEM.”
The NSE AseM Index, which tracks the performance of companies listed on this specialised board, dropped from 964.59 points in 2012 to 962.31 points in 2013; indicating less contribution to the 47.19 percent growth recorded by the NSE All Share Index (ASI) which tracks the performance of the entire market.
NSE ASI grew from 28,078.81 points in 2012 to 41329.19 points in 2013.
Market watchers are of the view that the Nigerian Stock Exchange should begin to look into models that work for other Exchanges with such specialised board. Some of them include the London Stock Exchange and the Nairobi Securities Exchange ‘Growth Enterprise Market Segment (GEMS)’ introduced to help Kenyan small to medium-sized enterprises (SMEs) raise capital by creating a less exclusive tier of companies trading shares on the stock market.
The London Stock Exchange Alternative Investment Market (AIM) is the most successful growth market in the world. Since its launch in 1995, over 3,000 companies from across the globe have chosen to join AIM.
It is the London Stock Exchange’s international market for smaller growing companies.
Recent issues in AIMs and expected money raised are Nasstar plc (£10.5million); RM2 International S.A (£137.2million); Healthcare Investment Opportunities plc (to be renamed Collagen Solutions plc); Kodal Minerals plc (£1million); Panther Securities Plc; and Action Hotels plc (£30.5million). Also new issues in this market are Venture Life Group Plc; Hurricane Energy plc (£18million); Actual Experience plc; Allana Potash Corporation; Leyshon Energy Limited; Vislink plc; and CityFibre Infrastructure Holdings plc (£16.6million).
Till date, companies listed on NSE ASeM and their sectors are Adswitch plc (Industrial goods), Anino International plc (oil and gas), Capital Oil plc (oil and gas), Juli plc (services), Mcnichols plc (consumer goods), Rak Unity Petroleum Company plc (oil and gas), Rokana Industries plc (consumer goods), Smart Products Nigeria plc (construction/real estate), and Navitus Energy plc (formerly Union Ventures & Petroleum plc) which is in the oil and gas sector.
The last month of 2013 witnessed a successful N1.5billion Initial Public Offering (IPO) by Omoluabi Savings & Loans Plc – the shares of this company are due for listing on ASeM this month.
“There are three major pillars supporting ASeM: Designated Advisers (Accredited capital market operators to prepare SMEs for listing and provide continuous financial advisory support throughout the listing life of the company); Institutional Services (A value add of The NSE to help SMEs formalise their businesses, ahead of listing); and Growth Ambassadors (Influential individuals to project the board to relevant stakeholders)” sources at the Exchange further said.
By: Iheanyi Nwachukwu
