The Nigeria Stock Exchange introduces new value added services in its continuing efforts at building investor confidence and transforming the stock market
Determined to reposition the stock market, management of the Nigerian Stock Exchange, NSE, late last month unveiled five new added services as part of its business development efforts. At the launching ceremony on 30 November, Mr. Oscar Onyema, the NSE Managing Director/Chief Executive Officer described the services as designed to facilitate new listings and create competitive edge for companies listed on the Nigerian bourse. The services are expected to stimulate investors’ interest in the market through enhanced information delivery as well as assist listed companies in complying with post-listing obligations and retraining their listing status.
“To this end, the NSE is partnering with various local and international organisations to provide services in corporate access investor relations, institutional services, corporate governance and independent equity research to enhance the value proposition of listing on the NSE,” Onyema said.
The corporate governance bouquet will assist the boards and executive management of listed companies to adhere to best practices in the rules and process by which their businesses are operated. This will be through training programmes for directors and other stakeholders. The aim is to promote fairness, transparency, accountability and integrity in an organisation’s relationship with its stakeholders with a view to increasing shareholder value.
The investor relations value added service is designed to help enhance the understanding of a company’s strategic direction by the investor community, encourage informed deliberation and analysis among investors and analysts on a company’s performance through the provision of timely appropriate and accurate information, improve a company’s market reputation and visibility and could lower the cost of accessing global capital markets.
The NSE has engaged the services of independent investment research firms to produce company reports for the investing public. Here, the focus is on less visible listed companies that are not covered by sell-side analysts. The NSE aims to raise these companies’ profiles and visibility among investors to ultimately engender more interest and activity on their shares.
Mr. Jude Fejokwu, Chief Executive Officer/Principal Analyst, Thaddeus Investment Advisors and Research, one of the companies the NSE engaged in the value added services initiative, disclosed that the research report will be silent on whether to buy, sell or hold the stock, just as there will be no pricing and forecast. The onus is on the investor to make informed investment decisions based on the research report. The reports are available for sale through the NSE’s website, (http://www.nse.com.ng/our markets/vas/pages/analystcoverage.aspx)
The institutional services offering is designed mainly for small and medium size companies, SMEs, seeking to access the Alternative Securities Market, ASeM. This service is intended to aid SMEs in the design and documentation of appropriate internal business structures, management processes and procedures to position them as world class enterprises. As Onyema noted, “a well-structured institution enhances accessibility to finance”. The NSE has engaged the services of Nextzon Business Service Limited and is partnering with the Institute of Directors to make the Value Added Services initiative a success.
Mr. Jacob Esan, Director, Scarborough United Group, London and Executive Director, Investment Banking and Public Sector, DEAP Capital lauded the new idea. “When the Exchange came out with this idea to aid investors, it should be welcomed and it should be encouraged. With the kind of market we have and the level of sophistication of our market, I think that by and large, we, the creation of these services investors would be able to make better informed investment decisions. This development shows that it will expand investors’ base and will increase coverage on the companies that we have listed this year. This will allow a wider dissemination of information across board to potential investors and the companies that we plan to bring to the market,” Esan said.
Mope Abudu, Head, Institutionalization and Advisory Services at Nextzon said their collaboration with the NSE will focus mainly on building SMEs and transiting them from being informally or unstructured business to becoming properly structured enterprises. “On how we are assisting these SMEs to access finance, I think it is a chicken and egg situation. Really we do know that most of these SMEs require finance. But some of the reasons they are not able to get finance is because they are not able to provide that can of confidence that the fund provider requires. The fund provider will ask for. And even when they get it, it is more important that they use it judiciously. They don’t have to divert it. So we are trying to build more institutional structures within these businesses so that this issue of not being able to access money would gradually be addressed,” Abudu remarked.
Mohammed Jalo-Waziri, Executive Director, Business Development at the NSE disclosed that the Exchange will be introducing five new products within the next three years, “It is already on the third product. We have two more to go. We are planning to introduce futures and options. We are trying to take the market capitalisation to $1 trillion by 2016. And how do we do that? By getting companies listed, by introducing new products, by deepening the market. And thereby making our exchange the African investment destination,” Jalo-Waziri said.
Jalo-Waziri advised investors to go to the NSE portal to get the investors relations service report with less than N20,000. “The only challenge we may have is about how independent the research may be. But if we discover that a particular service provider is not performing to expectations, we will not hesitate in replacing it,” he declared.