Despite the volatility witnessed in the Nigerian stock market, the Nigerian Stock Exchange (NSE) has admitted the shares of eight companies valued at N282.902 in 10 months.
Also, the May and Baker Plc is currently raising fresh capital of N2.45 billion, while Fidson Healthcare has gotten NSE approval for raise about N4.5 billion through its existing shareholders.
Stanbic IBTC Holdings listed 64.21 million units bonus shares worth N3.21 billion, while Notore Chemical industries listed by introduction a total of 1.61 billion shares value at N100.75 billion.
For rights issue, Flourmill Nigeria, Morison Industries, Lafarge Africa, UAC of Nigeria, consolidated Hallmark Insurance and Union Bank listed shares valued at N39.86 billion, N502.19 million N73.05 billion, N15.37 billion, N80 million and N49.75 billion, respectively.
When compared to last year that the equities market performed impressively, which led to increase in companies sourcing for new capital, but this year due to the high volatility in the market, activities declined.
Last year, the value of supplementary listings increased by 27 per cent from previous year, bringing the total value of equity issues in 2017 to N408 billion.
The primary market is the part of the capital market that deals with the issuance of new securities and then sold to investor directly by the issuer.
Companies can source for funds through different types of instrument under the primary market, most common is rights issue, a process where companies source for capital through its existing shareholders.
Capital market play a critical role in economic development by pooling domestic savings and mobilising foreign capital for productive long-term investment. In this way, it facilitates and promotes the process of economic growth in the country.
Capital market analysts said that the inability of the Exchange to inspire primary market activities can be seen in the performance of the secondary market as illiquidity persist in the market.
The secondary market indicator, the Nigerian Stock Exchange (NSE) All-Share- Index, as at October 30, 2018 recorded year-to-date loss of 13.27 per cent.
The dip is largely due to cautious dominated by selling positions, as investors sold-off their positions due to the political tension, dwindling economic activities and capital outflow. The Nigerian stock market’s indicators have remained on a downtrend for eight consecutive months.
The chief operating officer of InvestData Consulting Limited said that under the primary market, many listed companies explored the option of sourcing cheap funds through right issues.
He maintained that it was only when activities in the primary market of the Nigerian capital market were rejuvenated that the Nigerian capital market would be said to have started to breathe again.
Also, the managing director of HighCap Securities Limited, Mr. David Adonri, observed that the restoration of investors’ confidence in the secondary market would automatically lead to revival of the primary market.
He stated that when the stock market fully rebound after the election in 2019, the market may likely see increased activities in companies raising funds through the primary market.
He added that many companies were waiting for the right time to access funds in the market to enable them record 100 per cent subscription.
Managing director of Dependable Securities Limited, Mr. Chineye Ayanwu, said that the secondary market determines what happens in the primary market.
“The primary market is hinged on the market rebounding, right now the value of most of the stocks is considered to be below their book values,” he added.
In an attempt to restore investors’ confidence in the primary segment, he said that the NSE had set up a new department to encourage companies that have done private placement in the past to come and list as this would give leverage to the primary market.
Speaking to media, recently, the managing director/CEO of May and Baker Plc said that the shareholders approved an additional capital of N3.2 billion at the 2014 annual general meeting.
He stated that the company was waiting for the right time when the appetite in the market would support such move, saying that “around the third quarter of 2017, the market showed signs of readiness for this offer and so we began to plan to hit the market before end of second quarter, 2018.
“However the 2019 election fever anticipated to hit by fourth quarter, 2018, caught the market much earlier, before end of first quarter, 2018 and the market has remained bearish since then.”
He however said the board after due consultations with significant shareholders decided to continue with its move to source for new capital through rights issue.
Also, during the listing of Notore Chemical, the chief executive officer of NSE, Oscar Onyema, called on more local players to explore the different opportunities in the capital markets for raising long term capital.
“We believe that increased participation of indigenous companies in the capital markets will increase investors’ confidence, both local and international,”Onyema added.
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