Stock Exchange’s shares hit market with N50b valuation

The conversion of the Nigerian Stock Exchange (NSE) to a public limited liability company has reached a momentous completion, with the allocation of ordinary shares of the emergent holding company, Nigerian Exchange (NGX Group) Plc, to members of the defunct NSE, who are now shareholders in NGX Group.

Regulatory and trading documents obtained at the weekend showed that the NGX Group issued two billion ordinary shares of 50 kobo each with a market value of N50 billion. A total of 1.964 billion ordinary shares of 50 kobo each were allotted to former institutional and individual members of the defunct NSE.

The balance of 40.08 million ordinary shares of 50 kobo each, representing two per cent of issued share capital, was set aside as claims review shares for possible allotment to parties that may lay claims to entitlement to shares in the demutualised NGX Group.

Trading data indicated that the NGX Group, which was listed on the NASD OTC Securities Exchange, started trading at N25 per share but declined to N22.67 per share at the weekend.This implies a net capital depreciation of about N4.7 billion during the immediate trading period.

Shareholders also flooded the market with the newly issued shares, forcing the shares of NGX Group to close on offer. Market sources said they expected the share price of NGX Group to fall further, as the interplay of demand and supply strive to extract the true valuation of the stock.

The newly listed NGX Group was the most active stock at the NASD, in terms of volume and value, with total turnover of 8.90 million shares valued at N211.81 million in 90 deals.

The conversion of the defunct NSE from a not-for-profit, member-owned mutual organisation limited by guarantee to a profit-making, public limited liability company with shareholders, led to the creation of a holding company NGX Group with three subsidiaries  namely: Nigerian Exchange Limited (NGX Limited), the operating exchange, which took over the listing and trading function of the defunct NSE; NGX Regulation Limited (NGX REGCO), the independent regulation company which took over the self regulatory functions of the defunct NSE; and NGX Real Estate Limited (NGX RELCO), the real estate company that took ownership of real estate and other assets, including the iconic Stock Exchange building in Lagos.

Under the arrangement for the conversion, otherwise known as demutualisation, NGX Group was created with an authorised share capital of 2.5 billion ordinary shares. A total of 2.0 billion ordinary shares of 50 kobo each were registered with the Securities and Exchange Commission (SEC) and were issued to members, with 40.08 million shares warehoused as claims review shares.

The paid up issued shares were allotted to some 432 shareholders, including 255 institutional shareholders and 177 individual shareholders. The shareholding was arrived at by converting the dealing members of the Exchange to institutional shareholders and ordinary members to individual shareholders.

According to the scheme, shareholdings would be on equal basis in the immediate conversion period with each institutional shareholder holding 6.01 million ordinary shares of 50 kobo each while each individual shareholder holds 2.44 million ordinary shares of 50 kobo each.

With this, each institutional shareholder now holds 0.3 per cent equity stake while each individual shareholder holds 0.1 per cent equity stake, in line with the membership-share conversion ratio of 78 per cent for dealing members and 22 per cent for ordinary members.

While the NGX Group has secured members’ approval to list its shares on NGX Limited, its shares were floated on the NASD after allotment in line with extant capital market rules.  Capital market rules require all securities of public companies to be registered with the SEC. Where such shares or securities are not listed on the regular exchange, trading on such shares or securities must be on a regulated over-the-counter platform registered by SEC.

Managing Director, NASD OTC Plc, Mr Bola Ajomale, at the weekend, said NASD provides an orderly, lightly regulated and transparent environment with structure and experienced traders, which perfectly met the aspirations of the owners of NGX Group.

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“The market delivers on the basis of easy onboarding and withdrawal of securities into and out of the market space and the code for NGX – SDNGXGROUP was created at the depository within a 48-hour period.  We are pleased to be able to do our part in deepening the capital market by expressing our mandate of creating liquidity transparently,” Ajomale said.

As agreed under the scheme, NGX Group’s shares would be allocated to all members-institutional and individual, living and dead, with shares due to deceased ordinary members and expelled or liquidated dealing members being allocated to their legal representatives.

The Federal Government, through the Bank of Industry (BOI), many state governments including Adamawa State and several prominent Nigerian businessmen and policy experts are among a total of 432 individuals and institutions that hold shares of NGX Group in the immediate period of the conversion.

Other shareholders include Mr Akintola Williams, late Senator Theophilus Adebayo Doherty, late Sir Odumegwu Ojukwu, late Alhaji Shehu Bukar, late former President Umaru Yar’Adua, late Bashorun MKO Abiola, late Dr Abdul Lateef Adegbite and late Mr Gamaliel Onosode among others.

Other individual shareholders are Chief Ernest Shonekan, Alhaji Aliko Dangote, Alhaji Abdul Rasaq, Alhaji Aminu Dantata, Mr Tony Elumelu, Mr. Oba Otudeko, Mr. Pascal Dozie, Chief Bayo Kuku, Chief Christopher Ogunbanjo, Dr Christopher Abebe, Mr Goodie Ibru, Alhaji Isyaku Umar,   Otunba Adekunle Ojora, Mr Phillip Asiodu, Rear Admiral Allison Madueke, Rabiu Gwadabe, Mr Raymond Obieri, Senator Udo Udoma and Senator David Dafinone among others.

Institutional shareholders will include GTI Securities Limited, CSL Stockbrokers Limited, Capital Assets Limited, Cowry Asset Management Limited, Meristem Securities Limited, APT Securities and Funds Limited, Capital Bancorp Limited, Centre-Point Investments Limited, Chapel Hill Denham Securities Limited, Emerging Capital Limited, Stanbic IBTC Stockbrokers Limited, Trust Yields Securities Limited and Vetiva Capital Management Limited among others.


The demutualisation of the defunct NSE brought the Exchange to the full cycle of its history. The NSE was established as the Lagos Stock Exchange (LSE) on September 15, 1960 under the provisions of the Companies Ordinance 1922, with a share capital of £5,000 divided into 500 ordinary shares of £10 each. At incorporation, each of the original subscribers subscribed to five shares in the Exchange.

Subscribers at incorporation included C. T. Bowring & Co. (Nigeria) Limited, Senator Chief Theophilus Adebayo Doherty, John Holt Nigeria Limited, The Investment Company of Nigeria Limited, Sir Odumegwu Ojukwu,  Akintola Williams and Alhaji Shehu Bukar.

The share capital of the Exchange was subsequently increased to N20,000 consisting of 1,000 ordinary shares of N20 each, pursuant to an ordinary resolution dated December 2, 1977. The name of the Exchange was then changed from the Lagos Stock Exchange to the Nigerian Stock Exchange on December 15, 1977.

However, following the enactment of the Companies and Allied Matters Act (CAMA) 1990, companies limited by guarantee were prohibited from being registered with a share capital; and all such existing companies were mandated to re-register without a share capital. The NSE was re-registered on December 18, 1990 as a company limited by guarantee and the then existing share capital of N20,000 was cancelled; and the equity rights of the initial subscribers extinguished. Thus, from then till the demutualisation, the NSE operated as a mutual company limited by guarantee with no issued or paid-up share capital; as such no individual or corporate entity had equity-based ownership rights.

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