GSK, PZ, others pull over N127b from bourse
With close to N127 billion capitalisation of four listed firms pulling out from the stock market within eight months, shareholders yesterday, blamed the Securities and Exchange Commission (SEC) for the renewed move by companies to delist voluntarily from the exchange and rising capital flight.
This came as PZ Cussons disclosed, yesterday, that it would acquire shares held by other shareholders of PZ Cussons Nigeria Plc (PZCN) subject to prevailing market conditions.
The company offered to buy the shares at N21 apiece. The proposed transaction is, however, subject to the consideration and approval of the Board of PZCN, the company’s shareholders and requisite regulatory authorities, according to the statement.
PZ Cussons Nigeria is currently the 36th most valuable stock on the NGX with a market capitalisation of N75.8 billion, which makes up about 0.203 per cent of the Nigerian equities market.
The shareholders, in separate interviews with The Guardian disclosed that some firms in the oil and gas sector are currently seeking regulatory approval to delist from the exchange.
According to them, the regulatory authority has abandoned its oversight functions and failed to engage the management of the listed firms at regular intervals to find out what their challenges and weaknesses are to find lasting solutions to the problems.
They said this is why directors of listed firms have not prioritised regulation and compliance, which currently constitutes a significant risk to their businesses.
They urged the regulators to reverse the trend by strengthening engagement with the board of listed firms, monitoring their activities and encouraging companies to maintain their listing status.
Recall that the Nigerian Exchange Limited (NGX) had in July 2023 announced the delisting of Ardova Petroleum Plc from the daily official list. Before the delisting, market capitalisation of the company stood at N21.5 billion.
As shareholders were still counting their losses, Coronation Insurance with a market capitalisation of N14.4 billion came up with a letter to the exchange stating that it had received an offer from Coronation Capital (Mauritius) Limited to acquire shares of the company at 65 kobo per share and subsequently delist from the exchange.
Last month, news broke that GlaxoSmithKline Consumer Nigeria Plc (GSK) has pulled out all its operations from Nigeria, seeding shivers through the market.
Glaxo Smithkline Consumer is currently the 63rd most valuable stock on the NGX with a market capitalisation of NGN 15.5 billion, which makes about 0.042 per cent of the Nigerian Exchange Limited (NGX) market capitalisation.
President of Independent Shareholders Association of Nigeria (ISAN), Moses Igbrude, said the directors of the delisting firms in interaction with leaders of shareholders groups cited the high cost of listing as a major factor fuelling the renewed delisting.
He said: “My interaction with some of these firms indicated that the cost of listing, the fees they pay to the SEC, NGX, Registrar, CAC and even IFRS is eroding their bottom line.
“This is in addition to the harsh operating environment and infrastructure challenges in Nigeria. The regulators have failed to find out what their challenges are to see how they can assist them to reduce their cost of operations.”
President of New Dimension Shareholders Association, Patric Ajudua said shareholders have reported corporate governance lapses perpetrated by the boards of PZ Cussons, especially the assets stripping but noted that the regulators have not made any efforts to investigate the matter.
Assets stripping is the practice of taking over a company in financial difficulties and selling each of its assets separately at a profit without regard for the company’s future.
Ajudua said: “The SEC has abandoned their oversight function in preference to imposing high penalties/fines on these companies. Their major role is to monitor the activities of the firms every quarter through unscheduled visits/interactions to find out if they are truly observing good corporate governance.
“I seriously doubt if SEC acts on the whistle-blowing report because in the case of PZ Cussons, shareholders have called their attention to the regulator on the asset stripping going on in the company before now and nothing was done about it.”
Co-founder of Nigeria Shareholders Solidarity Association, Gbadebo listed factors fueling the delisting of companies from the stock market to include: board disagreements, overseas parent policies, indiscipline by management/board of directors and corruption among others.
“It is quite unfortunate that ordinary shareholders suffer at the end despite our repeated warning at yearly general meetings and closed-door meetings with management and directors of these companies. If the regulation is now reset to state that bailout bargains must be based on the profit made by the company in the last five to ten years, we will start seeing a reduction in the number of delisting firms,” he argued.
