The Nigerian Stock Exchange (NSE) will today formally activate its new listing platform known as ‘growth board’ with the migration of four eligible companies to the new board. The four eligible companies that will be pioneers on the new board include of Chellarams Plc , LivingTrust Mortgage Bank Plc, McNichols Plc and The Initiates Plc.
The new listing window allows small and medium companies with track records of stable operations, growth and minimum corporate governance to list their shares and raise capital through the Nigerian capital market.
The new board is also expected to support the small and medium enterprises (SMEs) with direct access to capital and support services from the capital market. Nigeria Bureau of Statistics (NBS) indicates that SMEs account for nearly half of Gross Domestic Product (GDP) and more than three-quarters of employment.
Besides reduction in costs of listing and compliance requirements, the NSE, in collaboration with various strategic business partners and value added service providers, will provide support services aimed at creating competitive edge for companies on the board. These support services include pre-listing diagnostics; institutional services such as audit services, financial advisory, legal advisory, corporate strategic advisory; investor relations; analyst coverage, corporate access and corporate governance and customised trainings.
For a company to be listed on the growth board, it must be a duly incorporated public limited liability company with at least two years of operations, audited financial statements in line with the International Financial Reporting Standards (IFRS) and must have grown its revenue by a minimum of 20 per cent cumulatively in its last two years of operations.
Also, all companies to be listed on the growth board must undertake that their promoters or directors shall retain a minimum of 50 per cent of their shares for a minimum period of 12 months from date of their listing, and that the directors or promoters shall not directly or indirectly sell or offer to sell such securities during that 12-month period.
The framework meanwhile provides alternative requirements for listing for each segment. Under the entry segment, a new business may be considered for listing if it can provide evidence of investment in it by a core investor or a strong technical partner that has a minimum of two years’ operating track record, or a majority shareholder who is either a High Net Worth Individual (HNI) or is a director of a listed company. Under Nigerian rules, HNI is an individual with net worth of more than N100 million.
Besides, companies heading for the entry segment must have market capitalisation of not less than N50 million, a minimum of 10 per cent of its shares available or to be available to minority retail investors and at least 25 shareholders.
Under the standard segment, a new business may be considered for listing if it that can provide evidence of a core investor or a strong technical partner who has a minimum of four years’ operating track record, or a majority shareholder who is a HNI. The company must also have a minimum market capitalisation of N500 million, at least 15 per cent of its shares must be held or will be held by minority retail shareholders and it must have a minimum of 51 shareholders.
Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, explained that the board was designed to offer relaxed entry criteria as well as less stringent ongoing listing requirements and allows for greater accessibility to capital flows, global visibility and credibility through corporate disclosures.
He said the growth board also restructured current market segments to better meet needs along company’s entire lifecycle of entry segment – for companies with a market capitalization from N50 million and standard market for institutions with a market capitalization from N500 million.
According to him, the segmentation of the boards also provides alternative options for interested investors to participate in each company’s growth journey.
He pointed out that the new board was pivotal to efforts in catering to a segment of the economy that hitherto has been neglected and perceived as a high risk and low reward venture by most service providers especially in relation to access to capital from financial institutions.
He noted that the traditional role of the Exchange as an enabler of capital flow from areas of surplus to deficit holds good promise for its capability to support SMEs, as access to capital is the prime challenge faced by companies that are active in the SME sector.
“The growth board aims to encourage companies with high growth potential to seize the opportunity of raising long term capital and promote liquidity in the trading of their shares. The board also presents as an avenue for companies in their growth phase to leverage the NSEs platform and varied products and services to achieve their long term business objectives,” Onyema said.