The Nigerian Stock Exchange said on Tuesday it had won approval from members to become a listed company and had appointed a board of directors, paving the way to offering shares to the public.
The exchange began changing its ownership structure from a mutual company of stockbrokers in 2017, adding new shareholders in a process known as “demutualisation”.
It will now re-register as a profit-making entity owned by shareholders, called the Nigerian Exchange Group Plc, with a share capital of 1.25 billion naira ($4 million). It had been operating as a not-for-profit entity.
It has not set a date for listing the new entity, in which stockbrokers would will hold 78% of the shares. Ordinary members will own the balance. Seven directors and five independent directors have been appointed.
A separate subsidiary will be set up as regulator, to be called NGX Regulation Limited, the exchange said.
“In furtherance of our plans, we will move to … complete all necessary registrations and seek the final approval from the (Securities and Exchange Commission) to ultimately demutualise,” Oscar Onyema, the exchange’s chief executive said.
The exchange, the second biggest in sub-Saharan Africa and one of the main entry points to invest in Africa, has around 200 listed companies, all included in its benchmark share index
Johannesburg Stock Exchange (JSE), the continent’s biggest and most developed stock market, has been a listed company since 2006.
Nigeria is Africa’s largest economy, but the equities market has gone from being one of the world’s best-performing frontier markets to one of worst after currency restrictions and low liquidity in 2015 deterred foreign investors.
This year, shares in the oil-producing nation had started to rally. But fears that a coronavirus outbreak could hit demand in China, one of Nigeria’s major trading partners, have reversed sentiment.
On Tuesday, stocks rose 1.7% to 26,255 points, recovering from an almost three-year low it reached the day before.
The exchange has said it hopes that the demutualisation will help it improve transparency and product development and deepen the market, leading to greater inflows from foreign investors.