Subsequent Wave: Ought to Nigeria’s startups contemplate itemizing on its inventory trade?

First printed 7 January, 2024

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Ever because the Nigerian Inventory Alternate Group (NGX) secured regulatory approval for the NGX tech board from Nigeria’s Securities and Exchange Commission (SEC) in 2022, it has been very severe about getting tech startups within the nation to record.

Temi Popoola, the brand new group managing director/CEO of the NGX, has been the important thing man in entrance of that marketing campaign. On the finish of 2023, Popoola was appointed group managing director/CEO, replacing a retiring Oscar Onyema , the previous GMD of the demutualised Nigerian Inventory Alternate Group (NGX). The rightness of this appointment could have been cemented by the strikes Popoola made in 2023 whereas he was appearing CEO.

Popoola’s mission on the Nigerian bourse is pushed primarily by two important objectives. The primary is to safe tech shares on the NGX Tech Board, and the second is to open the market to institutional and retail traders.

Popoola got here shut to those objectives in 2023, securing three listings final 12 months—Mecure Industries; Nigeria Infrastructure Debt Fund (NIDF); and VFD Group, a Lagos-based funding agency. All three listings contributed about ₦179 billion to the trade’s market cap in 2023. One of many three listings, VFD Group, represented a milestone as a result of in 2021 it invested a complete of $35.6 million into three firms , together with Piggytech (Nigeria’s main financial savings platform). Securing this itemizing implies that 2024 might see extra tech companies cosy as much as the trade.

A impasse on first strive

In a rustic that has produced over 400 tech startups, the NGX tech board is eyeing the likes of main gamers or tech unicorns like Jumia, OPay, Interswitch, Flutterwave and Andela to prepared the ground in itemizing on the inventory trade.

In September 2023, Popoola flew to New York to have a sit-down with Nigeria’s minister of communications, innovation and digital economic system, Bosun Tijani; Flutterwave CEO, Olugbenga Agboola; and the CEO of Chapel Hill Denham, Bolaji Balogun to debate the potential for Flutterwave itemizing on the inventory trade. The assembly was not broadly publicised, however there’s a viewing link to it. High of the agenda at that assembly was a plea made by Popoola to Flutterwave to record. He even provided a naira itemizing to get the tech agency to record. Flutterwave has but to make any commitments to the bourse.

To record or not?

It’s straightforward to get apprehensive in regards to the many issues that might go improper if a tech agency goes to the IPO market. Whether or not an inventory occurs on the NASDAQ or NGX, inventory costs can tank. Jumia’s shares plummeted in 2019 and it’s nonetheless chasing a comeback on the New York Inventory Alternate (NYSE) to the initial price of $14.50 apiece it listed with. Egyptian-born and UAE-based mobility startup, Swvl, endured the same rocky begin when it listed on the NASDAQ; its stock price fell by 99% after itemizing at $9.95 per share. Its current good fortunes have seen the inventory value rebound to $3, after it posted its first revenue in its H1 2023 results.

On the similar time,tech companies are sometimes keen to stay personal firms, because it protects them from being publicly-listed and simply investigated.

However there may be a lot to achieve from itemizing on the Nigerian Tech Board.

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Since 2020, Nigerian equities have supercharged the funding ecosystem. In that very same 12 months, Bloomberg named the trade because the best-performing inventory market from 93 international indexes. The pattern has continued upward since then. Publicly obtainable knowledge reported by TechCabal on Friday confirmed that the inventory market has consecutively opened the New 12 months since 2021 on a excessive. All by way of final 12 months, the Nigerian inventory trade recorded a forty five.9% progress, pushed by oil, gasoline, banking and tech shares. Round September final 12 months, common conversations in personal areas have been that should you put ₦1 million in any tech inventory, you’d get a minimum of ₦5 million, if no more. Final 12 months, the share costs of three publicly-listed Nigerian tech firms—Chams, eTranzact and CWG—have been up over 700%, in accordance with another TechCabal report. This new 12 months week alone, the Nigerian inventory market grew 6.54% to shut at a brand new all-time excessive of 79,664.66 points.

Though the inventory trade skilled delistings final 12 months, it nonetheless doesn’t diminish all of the optimistic proof exhibiting {that a} bull run has been on for the final three years; there’ll at all times be up and down instances within the inventory market.

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Since tech is usually touted because the “new oil”, an inventory by tech companies on the NGX Tech Board could possibly be a win-win that many tech unicorns in Nigeria want. Extra importantly, with Popoola on the helm, there may be renewed hope for the tech board which may carry extra overseas, institutional, and retail members to the market.

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Joseph Olaoluwa,

Senior Reporter, TechCabal.

Be happy to e mail joseph.olaoluwa[at]bigcabal.com, along with your ideas about this version of NextWave. Or simply click on reply to share your ideas and suggestions.

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