On Monday morning this week, the saying that success has many cousins and failure being an orphan played up in the Nigerian Stock Exchange (NSE).
For this piece, the success is identified with Seplat Petroleum Development Company plc that did a dual listing on both the NSE and London Stock Exchange (LSE).
Before this development, there was hardly any discussion about the stock market where regulators, analysts, brokers or even the media were present that had no link to Seplat listing. It is so because it is the first IPO since the market crash of 2008.
On that day, Seplat did a dual listing on the NSE and LSE, in addition to the presence of board and management of Seplat Petroleum Development Company, Diezani Alison Madueke, minister of petroleum resources, and Olusegun Aganga, minister of trade and investment; it was a success story worth gracing.
To the stockbrokers, issuing houses, receiving agents, the media, other government agencies, capital market regulators, retail investors, market analysts, NSE management and staff, even the NSE security men, it was all about Seplat. Just like a new ‘baby on board’ whom everyone wants to see.
Seplat offer size was approximately $500 million. As investors bid for the largest Initial Public Offering (IPO) in sub-Saharan Africa (SSA) since 2011, the listing of Seplat shares on the NSE is now seen to provide a landscape for the Nigerian stock market to thrive in terms of value, volume and deals. Seplat listed its share at N576 per unit. Up till now, many stockbrokers are optimistic that the share price of Seplat will go up considering the potential of the company.
Seplat Petroleum Development Company, which its chairman, ABC Orjiako like to describe as a ‘child of destiny’ with evidences to buttress his belief, is proudly an indigenous Nigerian company that has made giant stride in less than five years of operations, emerging in that space of time as Nigeria’s pre-eminent E&P company.
Seplat, which is the largest indigenous oil producing company in Nigeria, and operator of OML 4, 38, and 41 with a 45 percent interest, priced a N82 billion ($500m) IPO last week. The price, which was set at N576 a share, values the company at N306 billion ($1.9bn), about 3.4 times its net income for full year 2013.
Seplat listed over 543 million ordinary shares of 50 kobo each and has over the years maintained a track record of profitability, growing profit after tax by 278.11 percent year-on-year (y/y) to $452.77 million in 2013, from $109.09 million in 2012. Its shareholders have received increasingly impressive return on investment as Return on Equity (ROE) spiked to 71.33 percent in 2013 from 60 percent in 2012, and it paid a cash dividend of N16.5 per share in 2013.
The company, which is the first pure upstream play in the NSE, sold its shares to over 300 institutional investors with Nigerian shareholders consisting of over 48 percent, and will have a combined free float of over 42 percent of its shares on the NSE and LSE.
According to Aganga, “Seplat listing is about industrial development. It is the first time in history to have a Nigerian company in dual listing. Success of this has shown the world believes and understands the Nigerian story.”
Seplat’s successful listing shows the success of Nigeria’s policy of indigenisation of the oil sector, according to Diezani Alison Madueke. “We support Nigerian oil companies in the upstream, midstream and downstream oil and gas space,” Madueke said at the Seplat facts behind the listing presentation at the NSE that Monday afternoon.
She added: “This is part of a deliberate government policy of encouraging oil sector participation for our local companies. We expect more Nigerian oil and gas companies to list on the NSE in the future.”
Oscar Onyema, CEO, NSE, said: “The Exchange made a commitment to facilitate durable wealth creation by listing and nurturing the next group of African champions. That is, companies with over $1 billlion in market capitalisation with operations across the continent. We view your listing as a major step in your journey to becoming an African champion.”
He added: “We applaud the board and management of Seplat for their determination to be identified as first and foremost a Nigerian success story. The company chose to have its primary listing on the NSE and to maintain its Nigerian status by opting not to list on the Premium board of the LSE, though it was qualified to do so. We call on the petroleum ministry and regulators to recognise the NSE primary listing status of Seplat and other oil and gas companies for Local Content purposes.”
Earlier before the listing, a renowned managing director of an investment company said “the listing of Seplat at N576 will have a major impact on how Oando and others in that segment is configured. The listing of Seplat now creates a benchmark for others.”
To some, their joyful mood… gradually turned sour.
Shortly after the management of Seplat rang the closing bell for that day’s trading on the 9th floor and proceeded to the 20th floor for “facts behind the listing” presentation, which ordinarily is meant to offer the larger market community (stockbrokers, analysts, investors and the media) an opportunity/platform to know more about Seplat and ask questions if any, it was something else… which even affected most “partners in progress.”
On the sideline, what actually attracted me most was the enthusiasm of some staff of the NSE in implementing the instruction given to them by one of their bosses to “clear people from here… I don’t want this crowd here.” After which, a stockbroker (a woman) said: “open the door, I am a stockbroker. If you don’t open it, I will create scene here. Don’t you know I am a stockbroker?” she said annoyingly.
“I want to say something, is there any reporter here… if there is a reporter here please let me know before I say what I want to say,” said a stockbroker, while taking the lift out of the venue when she was told that the hall could not accommodate her and other of her colleague because it was full to its capacity. Sure, you know I didn’t alter a word… but was all ears to know her grievance. I know you will like to know what she said after all. I advise you leave it for me…
I also remember I heard another stockbroker, this time, a man also on the same lift while we all were moving out of the venue saying “what of Oando plc, is Mobil not there, Total has been there….” “Don’t bother yourself, next time when another company is coming, they will beg us to come and listen to them. Do you even see me come for this kind of thing,” he said annoyingly. Please, leave other comments with me.
Despite all this, I say “welcome on board Seplat!!!” The market is proud that you took a strategic step to join the prestigious club of quoted companies in Nigeria.
Iheanyi Nwachukwu
