Demand for investors’ protection deepens as companies exit NGX

As the Nigerian Exchange Limited regains its upward movement after the sharp dip following the general elections, investors have another challenge to deal with; companies seeking to delist from the NGX.

At least three quoted companies have expressed interest in delisting from the NGX. Energy company, Oando Plc is one of them. Days after releasing its unaudited report for 2021, Oando disclosed plans to delist from the NGX.

The company said that it received an offer from its core shareholder – Ocean and Oil Development Partners Limited- to acquire the shares of all minority shareholders in Oando and subsequently delist from NGX and re-register as a private company.

Under the buy-out scheme, minority shareholders will be paid N7.07 in cash for every ordinary share they hold.

Oando’s plan to delist from the exchange had been kicked against by the minority shareholders who had expressed reservations about the company’s plans to delist after years of not paying dividends or releasing results.

Reacting to the development, the Chairman Emeritus of the Independent Shareholders Association of Nigeria, Sunny Nwosu, slammed the company and lamented that shareholders of Oando, who have not been paid dividends in years, now have to compulsorily sell their shares.

He said, “This is not part of corporate governance, this is cheating! We have seen a lot of disrespect for shareholders, especially for people who think they are doing good investments by going to the capital market.”

In February, another oil firm, Ardova, announced plans to delist from the NGX following interests from its core investor, Ignite Investments and Commodities Limited, to acquire the shares of minority investors.

According to the company, the proposed offer was at a price of N17.38kobo per share, representing a premium of 22.44 per cent and 24.38 per cent to the 30-day and 60-day volume weighted average share price of N14.19 and N13.97, respectively on November 30, 2022; being the last trading day before the offer.

Another company in the process of delisting is Union Bank of Nigeria Plc which has been acquired by Titan Trust Bank.

In a statement signed by its Company Secretary, Somuyiwa Sonubi, the bank said, “Under the terms of the scheme, the shares, being the outstanding shares of the bank not already held by Titan Trust, will be acquired by Titan Trust for a consideration of N7.00 per share. Union Bank has received the ‘No objection’ of both the Central Bank of Nigeria and Securities and Exchange Commission.”

The NGX in April suspended trading in the shares of an integrated oil & gas offshore supply vessel services company, Global Spectrum Energy Services Plc, as it prepares to delist from the local bourse.

According to a list on the website of the NGX, tens of companies have delisted in the last 10 years for reasons ranging from voluntary delisting, merger with another company and regulatory reasons.

Some of the companies include Diamond Bank Plc with N56bn in market cap, which merged with Access Bank Plc in 2019. Ashaka Cement with N38.1bn market capitalisation delisted based on merger with Lafarge Africa Plc.

Seven Up Bottling Company delisted voluntarily from the NGX in May 2021 and now trades on NASD OTC Exchange. Similarly, Cappa and D’Alberto as well as IHS Towers, also exited voluntarily.

Meanwhile, Costain West Africa, MTECH Communication, MTI, and Nigerian Ropes were forcibly delisted by the NSE.

In 2020, A.G Leventis was delisted from the daily official list of the NGX while five companies were delisted in 2021. These companies include Portland Paints and Products Plc, Unic Diversified Holding Plc, Nigerian-German Chemicals Plc, Evans Plc and 11 Plc. Union Diagnostics and Clinical Services Plc and Studio Press Plc were also delisted in 2022.

Delisting allowed

For some market operators and shareholders, the delisting of companies is allowed as the market is structured for free entry and exit. They, however, called on regulators to improve on their oversight duties and protect minority investors.

The Chief Executive Officer of APT Securities, Garba Kurfi, in a chat with The PUNCH, said that it was essential that minority investors were not cheated as companies delist from the NGX or exit the capital market.