Afrigather The Nigerian Change Group (NGX) is constructive that regulatory adjustments will incentivise homegrown tech startups to checklist on its specialised expertise board this yr. Africa’s second-biggest trade is already talking to startups trying to entry native capital as enterprise funding declines globally.
“There are a few startups which might be contemplating itemizing,” Jude Chiemeka, appearing CEO of the NGX, advised TechCabal over a name. “We’re hopeful to see one or two listings this yr.”
The NGX has held a collection of engagements with the tech ecosystem to elucidate the advantages of being publicly listed. At a gathering of founders and venture capitalists in New York final September, Temi Popoola, the NGX GMD/CEO designate, tried to woo Olugbenga Agboola, CEO of Flutterwave, Africa’s greatest funds startup. Flutterwave is considering an Preliminary Public Providing (IPO) on the New York Inventory Change.
For the NGX, getting Nigerian startups listed has been a piece in progress. In December 2022, Nigeria’s Securities and Change Fee (SEC) accepted the rules for listing on the NGX tech board. The principles damaged into two—Begin-Up Tech and Huge Tech segments primarily based on market capitalisation—anticipate startups to fulfill company governance necessities, together with registering as a public firm and having shareholders and core buyers with a observe document. But just a little over a yr for the reason that guidelines have been launched, no startup has been listed on Nigeria’s inventory trade.
Most Nigerian startups haven’t caught up with the excessive stage of company governance required to go public, Chiemeka famous. “The SEC is attempting to make sure that buyers are protected. Whereas a few of them [startups] have been elevating capital from VCs, to entry public capital requires much more self-discipline.”
Iyinoluwa Aboyeji, founding father of Future Africa, a Lagos-based VC agency, believes that itemizing on the NGX tech board “is a much more lifelike exit technique for startups” fairly than ready for secondary exits from international buyers. “Corporations who need to return capital ought to start to align themselves with an exit on the native trade,” he advised TechCabal.
Whereas the Nigerian capital market has had a bull run within the final three years, with two of the most well liked shares final yr being legacy tech corporations—Chams Plc. and Laptop Warehouse Group Plc.—it is going to take far more convincing to get startups listed. The volatility of the naira could possibly be a difficulty.
“There’s a downside with the quantity of liquidity out there [on the NGX],” stated Jude Dike, CEO GetEquity, a market that helps startup founders elevate enterprise funding from retail buyers. “A startup that’s attempting to exit can be trying wherever from $10 million, which is someplace round 10 billion naira. How can we assure that such liquidity exists on the NGX?”
Since Nigerian startups sometimes elevate funds from overseas VCs and report their income in US {dollars}, itemizing on the Nigerian bourse won’t be an choice. For VCs, exits are how they justify the capital they elevate from their funders. As one among TechCabal’s senior reporters, Abraham Augustine, argued in this piece, “Placing an African firm—particularly an organization funded by American and European enterprise {dollars}—on an African inventory trade is a tough promote.”
Editor’s word: An earlier model of this text said that Jude Chiemeka is NGX’s head of capital markets. It has been corrected to replicate his new position as appearing CEO.
