Abiodun JIMOH
The Nigerian Exchange (NGX) is facing a significant blow as more companies, including industry giants, prepare to delist from the bourse. This growing wave of exits threatens to pull over N1.3 trillion from the exchange’s total market capitalization, raising concerns about the stability and future of Nigeria’s capital market.
Recently, Flour Mills of Nigeria Plc led the trend by exiting the exchange, and now, several other companies, including MRS Oil Nigeria Plc, Wapic Insurance Plc, International Energy Insurance Plc, and Lafarge Africa Plc (WAPCO), are considering the same move. The combined market value of these companies amounts to a substantial portion of the NGX’s overall valuation, which could impact investor confidence and market liquidity.
Lafarge’s parent company is finalizing a deal to sell its 83% stake in Lafarge Africa to the Chinese firm Hauxin Cement in a $1 billion deal. Following the acquisition, a mandatory tender offer will force minority shareholders to exit. For MRS Oil, the company is currently valued at N74.7 billion and has experienced a 107% gain in 2024. Wapic Insurance, with a market capitalization of N65 billion, saw a 175% rise in stock price in the same period. International Energy Insurance, despite being a smaller player with a market cap of N2.4 billion, has seen a 22% gain in its share price.
The combined exits of these firms, if completed, would result in the withdrawal of over N1.3 trillion from the NGX, compounding the financial strain already caused by last year’s delisting of 16 firms valued at N500 billion. This mass exodus follows a challenging period for the exchange, with many companies grappling with internal and external economic pressures such as high inflation, exchange rate volatility, and high interest rates.
For several companies, the tough competitive climate and weakened consumer purchasing power have made it difficult to maintain profitability and sustain growth. Industry experts warn that the exit of major firms could set a dangerous precedent, encouraging others in the manufacturing and oil sectors to follow suit.
Patrick Ajudua, President of the New Dimension Shareholders Association of Nigeria, expressed concern over the potential long-term impact of these exits. He noted that with fewer listed companies, the depth and diversity of the market could suffer, reducing investor options and making the capital market less attractive for new listings.
The delisting wave also raises questions about the future of Nigeria’s capital market. Dr. Paul Uzum, Executive Director of Halo Nigerian Capital Market Limited, highlighted that the economic challenges faced by companies like Lafarge are pushing them to reconsider their public listing status. He explained that companies are finding it increasingly difficult to survive in the current environment, where high inflation and the rising cost of living have diminished consumer purchasing power.
With more companies expected to follow the trend, regulators and policymakers must take urgent steps to ensure the long-term health of Nigeria’s capital market. As these firms exit, the NGX will need to work harder to maintain investor confidence and attract new listings to avoid further erosion of its market value.
The delisting crisis underscores the growing challenges facing Nigeria’s corporate sector and the capital market in particular, which could further deepen if the macroeconomic situation does not improve
