While confirmation on the possible listing of Interswitch, an electronic payment and digital commerce solution, on the London and Nigerian Stock Exchanges this year as reported by Bloomberg is on-going, concerns are being raised over the timing of the move.
Analysts say Interswitch may need to focus more stock sales on the international market against the domestic market.
It was reported over the weekend that the Nigerian-based payment firm has hired advisers to resurrect plans for a stock market listing.
According to a report by Bloomberg, JP Morgan Chase & Co., Citigroup Inc. and Standard Bank Group Ltd are among the firms working on an initial public offering, which may value the financial technology company at $1.3 billion to $1.5 billion.
While analysts are rather optimistic that the potential listing of Interswitch on the Nigerian Stock Exchange Market (NSE) will be welcomed with a smile on the faces of investors on the back that the Fintech space is an industry gradually gaining momentum globally, timing may be a major challenge.
“A look into sub-Saharan Africa, the industry is more or less in its growth stage, hence increase investors’ excitement on the news of the intention of Interswitch to list,” Gbolahan Ologunro, research analyst at CSL Stockbrokers Ltd, told BusinessDay.
In a market currently saturated with negative investor sentiments which have seen the NSE trend bearishly closing on Monday at a year-to-date (YTD) return of -11.45 percent, a good pricing of Interswitch shares on the NSE upon listing could see investors reward stock with higher prices, analysts say.
“We should see an uptick in the stock performance of Interswitch upon listing if priced at a discount to investor’s perceived fair value,” Ologunro explained.
Interswitch being a forerunner or major face of the Fintech industry may have to face through some peculiar headwinds inherent in both markets when the timing is put into consideration.
“I do not think this will be a good time for listing coming into the NSE except if its turns up to be a dual listing on both exchanges,” Paul Uzum, a Lagos-based stockbroker, told BusinessDay. On the back of trade concerns, monetary policy actions of systemic important banks, “investors are not too sure about the direction of the global economy and where it is headed,” Ologunro explained further.
More so, the analysts noted that fears over Brexit may dampen investor sentiment on the London Stock Exchange market (LSE).
Britain’s finance minister had over the weekend promised to leave the EU if conservative leader Boris Johnson is elected as the next British prime minister. Hence, concerns over the probability that there may be a “no deal” Brexit giving a possible exit on the 31st of October 2019, could inhibit investor’s sentiments of Interswitch shares on the LSE.
Taking a clue from how events of the market introduction of MTN Nigeria and Airtel had played out so far being companies with good prospects and potentials to deliver growth in earnings in the medium to long term, “we haven’t see a lot of positive interest from investors on these stocks as investors maintain caution,” Uzum noted.
However, Uzum maintained that getting benefit from the listing when finally concluded, Interswitch may need to focus more sales on the LSE than on the NSE if it ends up being a dual listing, “weak investors sentiment will definitely prevail on the NSE.”
According to Bloomberg, Interswitch pulled earlier plans to list in 2016 after the price of crude oil fell dramatically, causing a contraction in Nigeria’s economy.
According to Interswitch then, an uptick in growth may accelerate payments between companies and thus revenues at payment-services providers.
The question, therefore, remains whether the management team of Interswitch are optimistic on growth in the Nigeria economy and global space which could impact significantly on their revenues.
David Ibidapo
