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Experts urge FG to sustain diversification strategies to boost new IPOs on NSE

Nigeria's capital market

Nigeria’s capital market

Some financial experts on Friday urged the Federal Government to sustain its diversification strategies to boost Initial Public Offers (IPOs) on the Nigerian Stock Exchange (NSE).
Besides, they called on Securities and Exchange Commission (SEC) and NSE to review the listing requirements of IPOs on the exchange.

The experts spoke with the News Agency of Nigeria (NAN) in separate interviews in Lagos.

They said that proper implementation of diversification strategies by the government would revive new issues on the nation’s bourse.

Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, said that IPOs would elude the NSE if the government failed to fix the economy and create jobs.

Uwaleke said that the aim was to ensure inclusive growth for new issues to thrive on the exchange.

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According to him, the major constraint to new issues is the state of the economy.

“That the stock market has not recorded an appreciable number of IPOs in recent time is largely due to the general economic downturn.

“An IPO is not likely to succeed in a bearish market because new issues in such circumstance will be expensive to underwrite,’’ he stated.

Uwaleke said that the entire issuance process and listing requirements should be reviewed by SEC and the NSE to make them more attractive to unquoted companies.

“SEC and NSE should review the entire issuance process and listing requirements with a view to reducing issuing costs and making new listing requirements less stringent and attractive to unquoted companies,’’ he said.

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Prof Sheriffadeen Tella, Department of Economics, Olabisi Onabanjo University Ago-Iwoye in Ogun, said that new issues would resume with increased activities in the economy.

“When an economy is in recession, new issues are hardly successful.

“So, businesses rely on retained earnings or borrowing from financial markets.

“New issues will resume as soon as the economy starts picking up and demand for goods starts rising because new issues are required for business expansion,’’ Tella said.

Also speaking, the Managing Director, APT Securities and Funds Ltd., Malam Garba Kurfi, said that the 2008 global downturn of the market was responsible for investors’ loss of confidence in equities.

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He said that most investors invested in moribund companies without proper due diligence, adding that this was responsible for the poor activities in the primary and secondary markets.

Kurfi said that the Federal Government should ensure listing of all privatised agencies to increase activities on the nation’s bourse.

NAN reports that the Speaker, House of Representatives, Mr Yakubu Dogara, on July 8, said that the House would pass laws that would compel the listing of all multinationals on the NSE.

Dogara said that, “The flow of resources from the citizens to unquoted companies is what makes them rich.’’

He added that the country would engender economic prosperity through the listing of the unquoted companies.

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