In a recent announcement, the Nigerian Exchange Limited (NGX) revealed that new listings have played a pivotal role in contributing over 10% to the market capitalization over the past two years. The disclosure was made by NGX Chief Executive Officer, Temi Popoola, during the MTN Capital Markets Day in Abuja. Popoola discussed the challenges faced by global exchanges, particularly the rising trend of delistings.
According to data released by the Exchange, NGX has witnessed a remarkable surge in market capitalization, highlighting its growing prominence as a preferred destination for corporate listings and capital raising. Popoola acknowledged the global challenge of increasing delistings, noting that major exchanges, including Nigeria’s, are grappling with this trend. He cited Johannesburg as an example, stating that it has been struggling with delistings.
Globally, Popoola noted a more than 60% slowdown in Initial Public Offerings (IPOs) over the last two years, according to market data provider PitchBook. Additionally, there has been a noticeable scarcity of smaller cap stocks on public exchanges due to various factors such as voluntary and involuntary delistings, mergers and acquisitions, and liquidations.
In response to the shift of capital from public markets to private ones, especially among smaller companies, Popoola emphasized NGX’s strategic approach to replace delistings faster than they occur. He highlighted notable listings within the last two years, including BUA Foods, Geregu (the first power sector listing), MeCure Industries, VFD Group, and the first listed Investment Trust, Nigeria Infrastructure Debt Fund.
Popoola underscored the importance of government advocacy and policymaking as essential components in addressing the challenges faced by exchanges. Drawing on historical examples, he highlighted the transformative impact of government interventions through policy changes, citing the banking sector and pension reforms of 2004 as instances that have positively influenced market growth.
“As NGX continues to position itself as a dynamic and resilient exchange, the commitment to proactive strategies and collaboration with government initiatives remains at the forefront,” Popoola stated. The exchange’s focus on attracting and retaining listings underscores its dedication to fostering a robust and diverse market environment amidst global economic challenges.