Zainab Ahmed: NSE demutualisation critical to capital market development

Zainab Ahmed, minister of finance, budget and national planning, says the demutualisation of the Nigerian Stock Exchange (NSE) is critical to the development of country’s capital market.

The minister spoke at the virtual launch of, “The Stock Africa is Made of”, campaign organised by the Nigerian Exchange (NGX) Group in Lagos, on Tuesday.

In March, NSE completed its demutualisation process, joining the league of Johannesburg Stock Exchange and Nairobi Stock Exchange, already publicly listed companies.

The development resulted in the creation of Nigerian Exchange Group plc (NGX Group), a new non-operating holding company, with Oscar Onyema serving as its group chief executive officer (GCEO).

NGX Group also created three operating subsidiaries; Nigerian Exchange Limited (NGX Limited), the operating exchange; NGX Regulation Limited (NGX REGCO), the independent regulation company; and NGX Real Estate Limited (NGX RELCO), the real estate company.

Speaking at the event, Ahmed said the demutualisation is a landmark development that generated intense global interest.

She said the process will unlock opportunities for domestic and institutional investors, adding that it would enhance corporate governance, transparency and global visibility.

“It is expected to deepen the investor base of the exchange as it unlocks opportunities for domestic and institutional investors to realise significant economic value by bringing the capital market in line with prevalent international practices and standards,” she said.

“This demutualisation will also drive technological improvement, enhance products and offerings and facilitate faster and more real time trading operations.

“This will have an impact on the nation’s capital market by enhancing the growth of the NGX to become the leading stock exchange on the continent as the link for significant investment in Africa’s largest economy.

“I am particularly delighted to see this milestone achieved and I believe that demutualisation will help facilitate enough capital to support the federal government’s initiatives and infrastructural projects.

“It will also help corporates and financial institutions in raising capital whilst allowing the exchange to position itself for multinationals and local participation in the market.”

In his remarks, Adeniyi Adebayo, minister of trade and investment, said the demutualisation would strategically position the exchange in the global trading environment.

Adebayo said the transformation from a member ownership to a public limited company would allow businesses to engage in more strategic partnerships, which would significantly impact the capital market.

On his end, Abimbola Ogunbanjo, chairman of NGX Group, said the demutualisation will result in increased corporate governance framework, liquidity, and expansion of ownership base.

“With demutualisation the NGX Group will be well positioned to enable strong economic growth and contribute its quota to the development of the Nigerian capital market,” he said.

“There are series of opportunities available through demutualisation which include, strengthened corporate governance framework, increased liquidity, expansion of ownership base thereby diversifying ownership risks and increases investor participation.”

Here is an explainer TheCable wrote on the NSE demutualisation.