Private and unlisted public companies now have wider access to amenable funding through the capital market as the NASD OTC Securities Exchange Plc launches a portal that provides access to capital to pre-initial public offering (IPO) companies.
Pre-IPO companies include micro, small and medium enterprises and emerging growth companies, either as a private limited liability company or public limited liability company, that have not issued their maiden public share issuance, otherwise known as IPO.
A report obtained by the reporters indicated that the pre-IPO market would enable private and unlisted public companies seeking amenable funds for growth to source capital through the NASD platform.
Inaugurated in July 2013, NASD is registered by Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) as a Self-Regulatory Organisation (SRO). It provides the platform for trading of a broad range of instruments over-the-counter (OTC), including equities, bonds and other securities not listed on a formal general securities exchange.
According to the report, the portal opens the capital market to pre-IPO companies, which are seeking to interact with a limited number of single, non-bank financiers such as private equity firms and asset managers.
The pre-IPO market is also expected to give growth companies the needed capital market support that will ensure their long-term sustainability and ultimately increase the level of listings in the sub- Saharan region.
SEC had in April, last year granted NASD a no-objection approval, paving the way for the OTC platform to operate a restricted primary market for pre-IPO companies and accredited investors.
With more than 90 per cent of businesses in Nigeria classified within micro, small and medium enterprises (MSMEs) category, access to finance has been a major recurring challenge. The growth of MSMEs is seen as a centrifugal force to the attainment of national job security and growth.
The launch of the pre-IPO market is also expected to increase participating companies on the NASD as other capital market professionals can register and advise on the new pre-IPO portal while more pre-IPO companies are expected to evolve gradually to share issuance and listing.
Already, many leading private and unlisted public companies are listed on the NASD. These included Dufil Prima Foods Plc, the manufacturer of Indomie Noodles; Friesland Campina Wamco Nigeria Plc, manufacturer of Peak Milk brand; and Fan Milk Plc, popular manufacturer of Fan Yoghurts, NIPCO Plc, the majority core investor in 11 Plc, formerly known as Mobil Oil Nigeria Plc; Air Liquide Nigeria Plc Industrial & General Insurance Plc, Central Securities Clearing System Plc, the clearing and depository arm of the Nigerian Stock Exchange (NSE); Nigeria Mortgage Refinance Company, Acorn Petroleum Plc, ARM Life Plc, Afriland Properties Plc, BGL Plc, Consolidated Breweries Plc and Food Concepts Plc.
Others included Geo-Fluids Plc, Golden Capital Plc, Niger Delta Exploration & Production Plc, Partnership Investment Company Plc, Resourcery Plc, Riggs Ventures West Africa Plc, Swap Technologies & Telecomms Plc, Vital Products Plc, Fumman Agric Products Industries Plc, Free Range Farm Plc, FAMAD Plc, AG Mortgage Bank, Trustbond Mortgage Bank Plc, Mass Telecom Innovation (MTI ) , Providus Bank and Great Nigeria Insurance among others.
NASD had grown its trading commission by 481.32 per cent to N134.4 million in 2018 as increased trading activities lifted the performance of OTC platform. Trading commission rose from N23.1 million in 2017 to N134.4 million in 2018 due to increase activities carried out on the OTC platform.