Renewed confidence, excitement as NSE completes demutualisation exercise

Completion of the 10 -year demutualisation project of the Nigerian Stock Exchange (NSE) has opened a new vista, especially growth prospects in the bourse, as more people are likely to deepen investments and project the organisation more to the world.

The move, which would usher in the public listing of the exchange’s shares, was finalised yesterday following approvals from the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC).

Demutualisation is the transformation of a stock exchange into a public company that is shareowner-based. It allows the shares of the bourse to be quoted on its floor.

The development would enthrone a new regime of transparency against the not-distant era of opaqueness and insider-dealings that led to its crash in the wake of the global meltdown of 2008. To follow also, are more funds for government and the citizens.

It would equally provide the Exchange with more revenue resources to meet its needs and remain competitive without additional financial burden on brokers.
Increased ownership of the bourse could also enhance awareness and boost investors’ confidence.

Besides, corporate governance would be improved, as ownership will be separated from management, paving way for robust activities.

With the new arrangement, a new non-operating holding company, the Nigerian Exchange Group Plc (NGX Group) has been created.

The group now has three subsidiaries namely Nigerian Exchange Limited (NGX Limited), the operating exchange; NGX Regulation Limited (NGX REGCO), the independent regulation company; and NGX Real Estate Limited (NGX RELCO), the real estate company. All entities have been duly registered at the CAC.

The demutualisation of the NSE was first proposed in 2011, seeking proposals from local and foreign financial advisers in 2014.

Members of the NSE had passed a resolution at an Extra-Ordinary General Meeting on March 30, 2017 specifically authorising the National Council and Management of the Exchange to proceed with the exercise leading in deference to extant laws. They also ratified the engagement of financial, legal and tax advisers to expedite the whole process.

President of NSE, Otunba Abimbola Ogunbanjo, said the final approvals marked the achievement of an important milestone.

He said: “The successful demutualisation was one of my fundamental objectives when I assumed the presidency of the exchange.”

To the Chief Executive Officer of the NSE, Oscar Onyema, the Nigerian capital markets should play a role commensurate with the country’s status as Africa’s largest economy.

Also yesterday, stakeholders described the move as a major factor that would significantly increase the confidence of local investors and spur activities in the stock market
.

For instance, a Professor of Economics at Babcock University, Segun Ajibola, said the unbundling would ensure efficiency in the running of its affairs through the holding structure.

In his remarks, President of Chartered Institute of Stockbrokers, Olatunde Amolegbe, said the approvals would herald a new vista in the growth trajectory of the bourse.