136 Companies Restructured, Delisted From NGX as Businesses Battle Tough Environment
- As businesses continue to battle the tough economic environment, many more seem to be leaving the NGX
- A recently released compliance report shows that up to 136 companies have either restructured or delisted from the NGX
- This tough decision comes on the heels of major financial losses arising from FX volatility, and rising costs
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Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
Due to several business challenges, over 136 companies have filed for restructuring and delisting from the Nigerian Exchange Limited (NGX) within 24 years.
This is according to a recent report from the NGX.
The X-compliance report revealed that some of the challenges these businesses battled include foreign exchange volatility affecting imports, inflation and rising operation costs, naira depreciation, among others.
Source: UGC
The report reveals further that in the first nine months of 2023, the Nigerian subsidiaries of several foreign multinationals lost N900 billion to FX volatility.
More companies move to delist from NGX
According to the 2024 X-compliance report, another 14 companies are also in the process of restructuring or delisting to explore other strategic business opportunities.
The SUN reports that this includes Austin Laz & Company Plc, Thomas Wyatt Nigeria Plc, and FTN Cocoa Processors Plc.
Others like Med-View Airline Plc, Standard Alliance Insurance Plc, Goldlink Insurance Plc, Union Dicon Salt Plc, Staco Insurance Plc, Greif Plc, DN Tyre and Rubber Plc, Deap Capital, Aso Savings and Loans Plc, Multitrex Integrated Foods Plc and Capital Oil Plc, are also in the list.
Why companies are delisting
Market analysts opine that this move might be attributed to the low valuation of publicly listed companies or an absence of clear incentives to stay listed on the NGX and that it can ultimately affect the depth of the stock market.
However, NGX has maintained that the delisting of a few companies will not necessarily impact the market, as market capitalisation will continue to grow with other incoming listings.
CEO of Wyoming Capital, Mr Tajudeen Olayinka noted that some companies are delisting and restructuring because they do not believe their market price reflects the true value of the company.
By leaving the NGX and restructuring, they can raise capital at a better value, improve their business value, and later return to the NGX with a better valuation.
He noted that more companies, with bigger valuations are being listed in the NGX and the bank recapitalisation also means entry of more capital into the NGX, so the exit of these companies will not make much of a dent.
Recall that Okitipupa Oil Palm, Dangote Refinery and several others are expected to be listed on the NGX soon.
However, some others think it is a cause for worry.
Mr. Taiwo Oderinde, a member of the Pragmatic Shareholders Association, stated that the government should be concerned with the number of companies leaving the country and the NGX.
He suggested that the government could make the business environment more conducive by offering tax holidays or rebates, so businesses can thrive and create more jobs for Nigerians.
Flour Mills of Nigeria delists from NGX
In related news, recall that the entire issued share capital of the Flour Mills of Nigeria was delisted from the Nigerian Exchange.
This followed the December 16 announcement suspending trading in the securities of Flour Mills of Nigeria Plc.
Excelsior Shipping took over as majority shareholder, while minority shareholders would wait for their stockbroker to settle them in a cash-for-shares deal.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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