Shareholders lament voluntary delisting of 18 firms in nine years

Shareholders have expressed worry over the voluntary delisting of 18 listed firms with a total market weight of N476 billion from the bourse in nine years.

The 18 listed firms were among the 49 companies that exited the stock market between 2015 and 2024. The regulators delisted 29 other firms for failure to comply with post-listing requirements and merger reasons.

A good number of the voluntary delisted firms cited a harsh operating environment and general downturn as reasons.

The companies with a combined market capitalisation of N476 billion cut across various sectors of the economy.

On the economic front, the shareholders urged the government to address foreign exchange (FX) management issues, cut excessive taxes and invest in infrastructure that could support industries.

The 18 firms include Union Diagnostic and Clinical Services with a market capitalisation of N995 million, delisted on January 7, 2022. Newrest Plc was delisted from NGX daily official list on May 13, 2019, with a market cap of N4 3 billion while IHS Nigeria Plc joined the league on May 6, 2015 with a market cap of N1.01 billion,

Great Nigeria Insurance Plc followed with capitalisation of N1.91 billion delisted on January 25, 2019. Global Spectrum Energy trailed capitalisation of N1.98 billion and exited the bourse on July 11, 2023. First Aluminum and Dangote Flourmills were delisted on July 31 and November 18, 2019, at a market capitalisation of N844 million and N111 billion respectively.

Businesses have been grappling with deteriorating employment rates, low-profit margins and grossly underutilised capacity, with the most listed companies, especially the fast-moving consumer goods (FMCGs).

Manufacturers have continued to battle rising inflation and foreign exchange (FX) issues which resulted in the inability to cover rising costs and operational expenses.

Member of the Exceptional Shareholders Association of Nigeria, Olugbosun Ariyo said stimulus packages and sector-specific incentives will also go a long way in helping struggling companies recover.

According to him, the wave of voluntary delisting from the NGX, with nearly 50 companies exiting since 2015, reflects the harsh realities businesses face in Nigeria today.

He pointed out that companies are struggling with FX scarcity, rising energy costs, rising inflation, multiple taxes and poor infrastructure, making it increasingly difficult to remain profitable.

Ariyo stated that many businesses have opted to delist to avoid the high costs and regulatory burdens that come with staying listed.

He added that the trend has continued to limit shareholders’ ability to trade shares easily, reduce their liquidity and increase the risk of losing the value of their investments.

“Transparency suffers once companies leave the exchange, making it harder for investors to monitor performance or engage effectively for companies that voluntarily got delisted but still allow some minority shareholders to stay if they wish,” he said.

The President of NewDimension Shareholders Association of Nigeria, Patrick Ajudua, said the harsh business environment is hitting hard on virtually all the manufacturing companies, causing them to record low profits and in most cases, losses.

He said the decline in financial performance has eroded shareholders’ funds and cast doubt on their growing concerns.

Ajudua urged the government to address the problem of devaluation of currency and consistent rise in the FX rate.