Nigeria’s IPO market on the bounce as more companies plan to list

After a decade lull, the initial public offering (IPO) market segment of the Nigerian capital market is coming alive again as more companies have indicated their readiness to list on the Nigerian Stock Exchange (NSE).

Market sources have informed that three companies – Skyway Aviation Handling Company (SAHCOL), Ladol and Nigerian Reinsurance Corporation – are preparing for initial public offerings this year just as Singapore-owned Indorama Eleme Petrochemicals Ltd has intimated of a public float next year.

These listing intents are coming on the heels of South Africa’s MTN, which has said it plans to list its Nigerian unit this year but has not set a date.

The IPO market came to a halt after the 2008 financial crash, which wiped more than 60 percent off the stock market’s capitalization. However, the Nigerian bourse benchmark index has since recovered, gaining 42 percent last year but IPOs have yet to take centrestage, apart from oil company, Seplat’s dual listing in Lagos and London in 2014.

Despite market gains in 2017, the market could hardly attract retail investors, which left the market at the dictates of foreign portfolio investors whose recent sell-offs have affected the market.

Analysts say the more and more Nigerian companies get listed, the more the capital market gets deepened and domestic investors get into the groove.

“Market outlook is bright on these impending listing,” days a market analyst, adding that the FPI volatility would be curtailed.

Sources say SAHCOL is going through the regulatory process ahead of a planned IPO in August when core investors will sell a stake, while Nigerian Reinsurance aims for an IPO in November in which the government will sell part of its stake.

Ladol, a logistics hub for the offshore oil industry in Lagos, Nigeria, is mulling a stock-market listing and corporate bonds to expand its facilities and get more business from major production companies, according to its chief executive, Amy Jadesimi.

Family-owned Ladol is targeting to raise capital over the next two years.

“We are very open” to tapping public equity and debt markets, Amy Jadesimi told Bloomberg, without disclosing how much she wanted to issue.

Alex Okoh, director general of the Bureau of Public Enterprises (BPE), has equally indicated the government has 11 assets it plans to either concession or sell to strategic investors this year, ranging from power assets to sports stadiums.
“I’m expecting more transactions out of Africa in the equity markets, both in Nigeria and across Africa,” Miguel Azevedo, Citibank’s managing director and head of investment banking, Middle East and Africa, said.

“I think at the end of the year we will see that 2018 was the biggest year for African IPOs since the financial crisis.”

Nigeria’s stock market rose 16 percent in the first quarter, helped by rising oil prices, but has recently seen a selloff and is down 0.4 percent year to date as rising U.S. interest rates hit emerging markets and due to political risk ahead of a presidential election next February.