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ExxonMobil divestment: Capital market operators react

Nigeria's capital market

Nigeria’s capital market


By Chinyere Joel-Nwokeoma

Capital market operators on Thursday reacted diversely to ExxonMobil divestment from the country’s downstream sector.

Some of the operators said in Lagos that the divestment would encourage more individual marketers to embrace the Nigerian capital market.

But others attributed the divestment to unfavourable policies inherent in the country.

ExxonMobil, a U.S-based international oil company, on Oct. 19, divested its downstream operations in Nigeria.

The company sold its 60 per cent equity in Mobil Oil Nigeria Plc to Nipco Plc, an indigenous downstream oil and gas company.

Mallam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said that acquisition of the 60 per cent in Mobil by an indigenous company was good for the market.

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Kurfi said that being an indigenous company Nipco would not likely seek delisting from the Nigerian Stock Exchange (NSE).

He stated that with the entrance of Nipco, more individual independent marketers would seek quotations on the exchange, thereby deepening the market.

Mr Sola Oni, the Chief Executive Officer, SOFUNIX Investment and Communications Ltd., described the divestment as a normal business decision.

Oni said that the existing staff of the company must be treated fairly.

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“I am sure the NSE must be convinced about the motive for divestment, capability of the prospective buyer and value to the company before approval,’’ he said.

However, Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said that the company’s divestment was due to unfriendly government policies.

Omordion said that corporate governance issue might be a challenge with the ownership of Nipco.

“ExxonMobil selling its 60 per cent holdings to a Nigerian company means that the company will be fully owned and managed by Nigerians.

“And other companies in that sector managed by Nigerians are dragging their feet due to management problems,’’ Omordion said.

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He said that investors should be cautious in taking position in the stock for the time being.

Mr Boniface Okezie, National President, Progressive Shareholders Association of Nigeria (PSAN), said the divestment might be in line with American policy to pull out of the country’s downstream sector.

Okezie said that shareholders were not surprised with the divestment because the same thing happened in Texaco now MRS Oil some years ago.

He called on the new buyers to protect the interest of the minority shareholders and as well ensure good corporate governance.

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