Joe Anichebe, director, development institution and natural resources at the Bureau of Public Enterprises (BPE) has disclosed plans to go public with some of Nigeria’s privatised state-owned enterprises through an initial public offering scheduled between now and 2019.
The reported disclosure named Indorama Eleme Petrochemicals Limited; Skyway Aviation Handling Company Limited (SAHCOL), 100 percent owned by the Sifax Group; and Nicon Insurance Limited as enterprises to undergo IPO’s this year, while the IPO for the shares of the Nigerian Machine Tools (NMT), Osogbo, Osun State, would be done next year.
Explaining why the firms are being offered for sale to the public at this time, Anichebe said listing before now was a risk the BPE could not afford, as many of the SOEs were not profitable.
“You know that the first rule to listing on the Exchange is that you have to be profitable, and we don’t want to risk the money of poor Nigerians by offering IPOs for those companies when they are not being profitable.”
However, reactions have begun to trail the disclosure.
Shehu Sani a Nigerian senator and civil rights activist said “the reported decision of the BPE to sell off 10 state owned firms ‘to fund the budget’ is wrong.
I’m ideologically opposed to it. It will end up like the sell of power holding companies, enriching a few & without service delivery. I call on the president to stop it,” he said.
The proposed IPOs do not sit well with some equity market investors who are of the opinion that the timing may not be favourable to domestic investors.
According to Adebayo Adeleke, the former secretary general, Independence Shareholders Association of Nigeria (ISAN) the IPOs coming at this point may already be targeted at strategic investors, and not retail shareholders because the timing would not attract full participation from local investors.
“They cannot bring it at a time of the year when we are facing election. Why are they in a hurry to float within a month, it has been there for decades, and they want to sell off at this turbulent era, unless you have backdoor arrangement,” he said.
For Uche Uwaleke, a capital market expert and head, banking and finance department, Nasarawa State University Keffi, noted that timing, is critical to the success of an IPO.
In his opinion, “Regarding the Eleme petrochemical, I think the BPE calendar for coming to the market is in order. This is one company that will galvanise a lot of investors’ interests in view of its potential.
“The current political situation or headwinds in the economy will not stop such an IPO from unlocking idle investible funds, including those of foreign investors, who are bound to show more than a passing interest in the offering,” Uwaleke said.