‘Initial Public Offerings Market to be Active in Second Half of 2015’

Goddy Egene

The nation’s capital market will witness initial public offerings (IPOs) in the second half of the year, THISDAY checks have revealed. IPOs are made by companies issuing their shares to members of the public for the first time to raise fresh funds. IPOs were very common in 2007 and 2008 before the market witnessed a downturn. Since 2008, companies have been avoiding IPOs, embracing mostly rights issues and bonds.

Only Seplat Petroleum Development Company Plc and Transcorp Hotels Plc made IPOs last year. While Seplat, which was a global IPO, was 100 per cent successful, that of Transcorp Hotels Plc recorded 50 per cent subscription.

However, sources close to issuing houses told THISDAY that given the positive outlook the Nigerian economy is getting after the successful general elections and efforts of regulators are making to attract investors back to the market, the IPO segment of the new issue market would become active as from the second half of the year.

“The high political risk prior to the general elections prevented many investors from the market. And when you have a situation like this, no company would want to come out to take such risk. However, with the political risk going down due to the successful election, companies are now considering accessing the market via IPOs and get listed,” a source in one of the leading issue houses said.

The source explained that investors would focus more attention on the Nigerian market after the swearing of the new government to be led by Retired General Mohammadu Buhari.

“This is why companies are planning to float IPOs as from the second half of the year. They believe by then the political risk level would have reduced to very minimal level.Some foreign investors might even see the foreign exchange challenge as an opportunity to invest in Nigerian companies,” the source added.

Head, Equity Primary Markets, Africa, India and Middle East at the London Stock Exchange (LSE), Mr. Ibukun Adebayo, last November told THISDAY in London that the IPOs market would be active this year.

According to him, the driving force for capital raising across Africa in 2014 was debt, explaining that equity IPO raising would become active in 2015.

“It (IPO) is a question of time. The driving force for capital raising, not just Nigeria but