Dangote Flour Mills (DFM) has become the 110th firm to be delisted from the main board of the Nigerian Stock Exchange (NSE) since 2002. DFM was the 7th firm to be delisted in 2019 after Great Nigerian Insurance which was voluntarily delisted on January 25, 2019; Diamond Bank which was voluntarily delisted on April 1, 2019 after a merger with Access Bank; Newrest ASL Nigeria that was voluntarily delisted on May 13, 2019; First Aluminium that was voluntarily delisted on July 31, 2019; Skye Bank that was delisted through regulatory intervention on August 29, 2019; and Fortis Microfinance Bank that was delisted as a result of regulatory intervention on August 21, 2019.
When discounted by the current market returns, the market capitalisation of the delisted firms has caused the overall market capitalisation of the Nigerian Stock Exchange to lose N100 billion due to the delisting of the seven firms in 2019.
The delisting trend started in 2002 when Impresit Bakolori and Dumez Nigeria were delisted from the main board of the NSE. In 2008, nineteen firms were delisted from the NSE. In 2009, eleven firms were equally delisted with reasons ranging from voluntary and regulatory interventions.
“Some firms could not meet the post listing requirements of the NSE. So, the regulator will not allow them set bad precedents for others. In this regard, the affected firms will be asked to delist”, said an analyst who did not want his name in print.
While it is good to set good standards, the steady rise in the number of delisted firms calls for new strategy to attract and retain firms on the Nigerian Stock Exchange.
As at the close of business last week Friday, the market capitalisation of the NSE closed at N13.03 trillion. At the exchange rate of N306/$, this amounts to $42.6 billion, a far cry from the $1 trillion market capitalisation benchmark the NSE has been pursing for a while.