BusinessDay

Bulk of these companies’ shares still with controlling-interest investors

…stock buyers risk price manipulation, dearth of liquidity

No fewer than 25 listed companies on the Nigerian Stock Exchange (NSE) still have reasonable percentage of their shares in the hands of controlling-interest investors.

In stock trading, the portion of a company’s shares that are in the hands of investing public as opposed to locked-in shares held by controlling-interest investors represents its free float.

A company’s free float is important to potential investors because it offers insight into the company’s stock volatility. Stocks with small free float tend to be more volatile because there are only a limited number of shares that can be bought or sold in the event of major trading news.

The Nigerian Stock Exchange said Infinity Trust Mortgage Bank Plc which has 0.93percent free float valued at N52.789million has till May 17, 2021 to comply with the regulatory requirement.

The Exchange also gave Capital Hotels Plc with 13.14percent of free float valued at N447.602million till August 16, 2021 to comply with the regulatory requirement.

Transcorp Hotels Plc which was given May 18, 2020 deadline for regulatory compliance is said to still have 5.47percent free float worth N1.351billion. The Tourist Company of Nigeria Plc’s 1.75percent free float is valued at N111.359million.

Others are: Notore Chemical Industries Plc with free float of 10.02percent valued at N10.091billion, given till June 15, 2022 to comply with regulatory requirement.

Union Bank of Nigeria Plc which was given May 18, 2020 to comply is said to still have 8.32 percent free float valued at N12.352billion.

Companies listed on the Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities.

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Companies listed on the Growth Board are required to maintain a minimum of 10percent of their issued and fully paid up shares or the value of their free float must be equal to or above N50 million, for entry segment.

Also for Growth Board, it is a minimum of 15percent of the issued and fully paid up shares or the value of the company’s free float must be equal to or above N50 million, for standard segment.

For Alternative Securities Market (ASeM), it is a minimum of 15percent of issued and fully paid up shares or the value of free float is equal to or above N50 million.

Companies listed on the Main Board are required to have a minimum of 20percent of their issued and fully paid up shares or the value of their free float must be equal to or above N20 billion; while those on the Premium Board are required to have minimum of 20percent of their issued and fully paid up shares or the value of their free float must be equal to or above N40 billion.

Furthermore, Golden Guinea Breweries Plc’s free float of 10.27percent is valued at N83.436million; while Ellah Lakes Plc’s 14.55percent free float is worth N1.236billion. The company had December 31, 2019 compliance deadline. Ekocorp Plc with 12.64 percent free float valued at N378.059million had been given October 31, 2017 as compliance date.

Medview Airline Plc’s 14.16 percent free float is valued at N2.236billion; while Portland Paints & Products Nigeria Plc’s 13.92percent free float is value at N323.580million. It was given till August 16, 2020 to comply with the regulatory requirement.

The above companies and others listed thereafter have free float deficiencies and have applied for waivers from the Regulation Committee of the National Council of The Exchange (RegCom), and have specifically provided compliance plans with tentative timelines to support their requests. Most of the timelines have elapsed, according to the X-Compliance Report of the Nigerian Stock Exchange.

The X-Compliance Report is a transparency initiative of the Nigerian Stock Exchange (NSE), which is designed to maintain market integrity and protect investors by providing compliance related information on all listed companies.

Further check shows that CWG Plc which has free float of 15.97percent valued at N1.024billion has till August 16, 2021 to meet up with the post listing requirement. Aluminium Extrusion Industries Plc’s free float of 16.27percent is valued at N289.844million.

Caverton Offshore Support Group Plc’s 19.92percent free float is valued at N1.281billion. Caverton has till August 16, 2021 compliance date. Union Dicon Salt Plc’s 18percent free float is valued at N538.764million; while eTranzact International Plc’s 17.82percent free float is valued at N1.684billion. The company had December 7, 2020 compliance deadline.

The philosophy of free float is to hedge against high level of lock-in shares held by the company’s promoters. Companies that fail to comply with the requirement have breached part of their Post Listing Requirements which they signed to uphold.

It portrays these companies as not transparent and reduces effective public participation in these companies’ ownership. Notably, free float deficiency can attract sanctions from the Exchange, but investors are exposed to risk of price manipulation and dearth of liquidity.

Champion Breweries Plc’s 5.23percent free float is valued at N999.384million; while August 16, 2021 is the compliance due date. Prestige Assurance Plc’s free float of 15.46 is valued at N881.136million; Austin Laz & Company Plc’s free float of19.36 percent is valued at N424.363million; while Arbico Plc’s 19.96 percent free float is valued at N30.531million. It has compliance due date of June 15, 2023.

Skyway Aviation Handling Company Plc’s 8.72percent free float is valued at N392.904million; International Breweries Plc’s 11.06 percent free float is valued at N16.463billion; Abbey Mortgage Bank Plc’s 11.35 percent free float is valued at N770.099million; Living Trust Mortgage Bank Plc’s free float of 0.08percent is valued at N2.680million while UACN Property Development Company Plc has just 4.18 percent of its shares valued at N721.567million in the hands of the investing public.

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