Almost 365 days after the Nigerian Stock Exchange (NSE) re-launched the Alternative Securities Market (ASeM) for emerging companies, this all-important segment of the market is yet to attract any listing.
Consequently, the NSE’s goal of achieving a $1 trillion market capitalisation by 2016, as envisaged in its ‘five-pillar’ market strategy, is being threatened.
ASeM is a specialised board on the Nigerian bourse, where small to mid-sized companies can access the capital market under less-stringent rules and requirements to raise long-term and low-cost capital.
The NSE has shown commitment to targeted business development efforts, stronger regulatory environment, 21st century technologies, growth-enabling market structure, and first-rate investor protection programme.
In line with this objective, the NSE had on April 23, 2013 re-launched the ASeM which offers companies several options to liquidity from the public, either by Initial Public Offering (IPO), offer for subscription, offer for sale, or listing by introduction.
Despite these routes to listing on ASeM, informed sources within the market tell BusinessDay that prospective companies who eye listing on ASeM face the challenge of meeting the requirements outlined by the NSE.
Some of the requirements to listing on ASeM include companies providing: medium-term (at least two years) comprehensive business plan; financial statements/business records for two years prior to listing; and date of last audited accounts of not more than nine months.
Other requirements for listing include: minimum of 15 percent of share capital must be offered to the public; public shareholders of at least 51; and promoters must retain 50 percent of shares held at IPO for first 12 months. This is in addition to submission of quarterly, semi-annual and annual financial statements.
The NSE also requires companies eyeing ASeM to also retain a designated adviser to assist with regulatory compliance (complying with post-listing obligations and maintaining their listing status).
The Nigerian Stock Exchange appointed growth ambassador (GA) to project the ASeM brand and designated advisers (DAs) to assist ASeM companies with regulatory compliance.
The firms selected as DAs for companies in ASeM are ARM Securities Limited, BGL Securities Limited, Capital Asset Limited, CardinalStone Securities Limited, EDC Securities Limited, Fidelity Securities Limited and FSDH Securities Limited.
Others are Investment One Stockbrokers International, Magnartis Finance & Investment Limited, Marina Securities Stockbroking Services, Morgan Capital Securities Limited, Partnership Investment Company Limited, Primera Africa Securities Limited and UBA Stockbrokers Limited.
Florence Seriki, group managing director, Omatek Ventures plc, was appointed as the GA of the ASeM.
Despite these initiatives, there are still only 10 companies on the ASeM, namely, Smart Products Nigeria plc, Mcnichols plc, Rokana Industries plc, Afrik Pharmaceuticals plc, Adswitch plc, Anino International plc, Capital Oil plc, RAK Unity Petroleum plc, Union Ventures & Petroleum plc (now Navitus Energy plc), and Juli plc.
As at last year when ASeM was re-launched, its equity market capitalisation was N4.10 billion, but the NSE-ASeM Index, which tracks the performance of companies listed on this segment of the market, showed negative year-to-date (ytd) growth of 1.03 percent recorded in the week ended April 4, 2014.
Muhammad Nadada Umar, director-general, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), had at the ASeM re-launch urged the NSE to ensure that the listing requirements for the ASeM are not too stringent.
According to him, “There are two big questions to which answers must be found: (a) How do we ensure that we have a more robust and very liquid ASeM? (b) How can the majority of the SMEs in Nigeria be helped to meet some of the inevitable listing conditions of the ASeM? Answers to these questions are fairly straightforward: effective partnership between NSE and other public and private sector institutions, including SMEDAN in particular.”
Before now, the NSE had noted that the gestation period from learning about ASeM and finalising listing on the board is quite long, “owing to the various developmental stages of the companies”.
Post-launch, the NSE through the ASeM platform had organised events aimed at sensitising SMEs about ASEM and made comprehensive presentations at various events organised by SME associations to further increase awareness on accessing the capital market through ASEM.
Iheanyi Nwachukwu
