Lafarge, MRS, others to delist from NGX

Following the delisting of Flour Mills of Nigeria Plc from the Nigerian Exchange (NGX), there are speculations the trend may continue into the year as four listed firms are said to follow the same path.

Other companies considering delisting include MRS Oil Nigeria Plc, Wapic Insurance Plc, International Energy Insurance Plc and Lafarge Africa Plc (WAPCO).
The renewed wave of exit has continued to threaten the stability of the capital market, serving as a source of worry for regulators and policymakers.

While Wapic Insurance and MRS announced the intention to delist last year, sources said Lafarge and International Energy Insurance may join the league. Lafarge’s parent company has concluded plans to exit the company by selling off its 83 per cent stake to a Chinese firm, Hauxin Cement, in a deal worth $1 billion.

The Guardian learnt that after the acquisition, a mandatory tender offer will be triggered, mandating minority shareholders to exit the company. MRS Oil Nigeria is currently the 47th most valuable stock on the NGX with a market capitalisation of N74.7 billion, which is about 0.118 per cent of the market capitalisation as of the end of last year.

The company resumed 2024 trading at N105 and as of December 27, it had returned 107 per cent gain to shareholders to close at N217.80 kobo. Wapic Insurance is currently the 50th most valuable stock on the NGX with a market capitalisation of N65 billion, which makes up about 0.103 per cent of the NGX equity market. As of December 27, 2024, the stock price had risen from 68 kobo to N1.87 kobo, adding a 175 per cent gain.

For International Energy Insurance, the firm is currently the 129th most valuable stock on the NGX with a market capitalisation of N2.4 billion, with about 0.0038 per cent market control. The company’s share price appreciated by 22 per cent, from N1.39 kobo to N1.70 kobo.

Lafarge Wapco is currently the 14th most valuable stock on the NGX with a market capitalisation of N1.15 trillion, which is about 1.82 per cent of the exchange’s equity market capitalisation. The stock price rose from N31.50 kobo to N69, adding 119 per cent to its valuation last year.

The delisting of the four firms from the bourse will pull out over N1.3 trillion from the exchange’s total market capitalisation.In 2023, 11 firms valued at N500 billion were delisted from the exchange. Last year 16 others were delisted. Since 2002, 151 firms have been delisted.

Operators at the weekend affirmed that a good number of listed firms, especially those in the manufacturing firms, are grappling with a mix of industry-specific challenges, regulatory pressure and macroeconomic headwinds that have eroded their profitability and market valuation.

Specifically, they pointed out that the prevailing weak economy, occasioned by instability in exchange rates, high inflation, high interest rates among others is negatively impacting the firms’ operations.

They expressed fear that the delisting of Flour Mills has set a precedent that could embolden other struggling firms to take the same route this year.
President of the New Dimension Shareholders Association of Nigeria, Patrick Ajudua, said if the challenges persist, listed companies may find it more pragmatic to opt out of the public market and restructure away from the scrutiny and costs of listing.He pointed out that the renewed wave of delisting has sparked concerns about the health of Nigeria’s capital market.

According to him, with fewer listed companies, market depth and diversity could suffer, reducing the options available to investors and potentially deterring new listings. Executive Director of Halo Nigerian Capital Market Limited, Dr Paul Uzum, said Lafarge Wapco is exiting Nigeria because of the tough competitive climate.

According to him, the margins have shrunk due to the low purchasing power of people who now spend the bulk of household income on essentials such as food and drugs.