Since The Nigerian Stock Exchange (NSE) received final approvals of its demutualisation plan from the Securities and Exchange Commission (SEC) and Corporate Affairs Commission (CAC) respectively, Nigerian stockbroking firms have received 6 million units of NGX shares which represents ₦127 million at the current market price of ₦21.17.
Demutualization is a process by which a private, member-owned company, such as a co-op, or a mutual life insurance company, legally changes its structure, in order to become a public-traded company owned by shareholders.
Demutualization became a widespread phenomenon in the world of stock exchange since 1993, when the Stockholm Stock Exchange demutualized, the first exchange to do so. Several other renowned stock exchanges like Amsterdam, London, Deutsche, Paris, Hong Kong, Toronto, Chicago, NASDAQ, and NYSE, have since done the same.
Africa has also had its fair share of demutualization with the likes of Johannesburg, Nairobi, Mauritius, Seychelles, Rwandan, Casablanca and BRVM Exchanges being demutualized.
The process for demutualization of the Nigerian Stock Exchange started around 2009, during the tenure of Oba Otudeko as President and Professor Ndi Okereke-Onyiuke as Director-General of the NSE. The thought was brought about by the Council of the NSE at a special retreat in South Africa. Soon after that retreat, the Council of the NSE got into a brutal power struggle which many assumed was caused by the competition between contending principalities for ownership of the proposed demutualized Exchange.
The demutualization finally crystalized in 2021, after 12 long years since the proposal was put in place during the tenure of Oba Otudeko.
How did the brokers make their money?
The exchange was a mutual company owned by the members of the exchange. Before a company can trade its shares publicly, the company must be listed on an exchange, hence, the listing of the new NGXGROUP shares which is trading on the NASD (National Association of Securities Dealers) OTC market.
There are two types of members, the dealing members who operate on the exchange (Stockbrokers) and ordinary members, who are also made up of two types, those who started the exchange and those who were brought on by virtue of their economic status and contribution (these people include the likes of M.K.O Abiola, Aliko Dangote and so on).
After deliberation on how the ownership of the proposed shares would be split amongst all members, including dealing members and ordinary members, they concluded that ordinary members, upon listing will receive 2.4 million units of shares while dealing members got 6 million units of shares representing the conversion of the members’ stake to shares.
NGXGROUP shares listed on the NASD exchange at ₦25 per share. It traded at an all-time high of ₦30.26 but it is currently trading at ₦21.17, about 15.32% from its listing price and 30.04% from its all-time high.
What did the demutualisation bring?
Under the demutualisation plan, the new Group now has three operating subsidiaries which are, Nigerian Exchange (NGX Limited), the operating exchange; NGX Regulation (NGX REGCO), the independent regulation company; and NGX Real Estate (NGX RELCO), the real estate company. All the entities have been duly registered at the CAC.
In an interview with the NGX, they stated, “Each Dealing Member received 6,007,884 (six million, seven thousand eight hundred and eighty-four) ordinary shares of fifty (50) kobo each. Each Ordinary Member received 2,441,274 (Two million, four hundred and forty-one thousand, two hundred and seventy-four) ordinary shares of fifty (50) kobo each. Upon demutualization, the dealing and ordinary members became shareholders of the NGX Group. All registered dealing members (255) as of – May 11, 2017- the closure date for the register of Members, were allocated the shares. The NGX Group shares are available for bilateral trading on an OTC platform ahead of the listing of NGX Group on NGX. Authorized stockbroking firms registered on the OTC platform can trade the shares. Following the listing on NGX, Trading License Holders of The Exchange will be able to trade NGX Group shares.”
What market operators are saying
Lucky Djebah, the Managing Director of Mainstreet Bank Securities Limited stated: “We have received the NGX shares from the exchange. Mainstreet will be holding onto the shares because we see value in the company and we have been receiving demand from both individual and institutional investors. Because of this demand, the NASD market has been getting more traction as investors are looking to buy the NGX shares.”
Adeboye Teriba, The Managing Director of Qualinvest Capital Limited stated: “We are holding onto the NGX shares for now, so that we can measure the market perception of the new company. A lot of demand is coming from individual investors, in addition, trading license holders are also interested in increasing their holdings. The NASD is enjoying prime time with the listing of NGX and we expect this to grow further as the NGX starts making its financials public.”
Paul Uzum, the Head of Securities Trading at Planet Capital stated: “We are holding the share for the long term, however, there have been no demand from individual or retail investors. The NASD market is now getting more attention because of the listing of the NGX shares.”
KQ resumes Mumbai flights after 4 months
- Kenya Airways will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
- The airline in a notice to its customers yesterday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.
Kenya Airways #ticker:KQ will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
The airline in a notice to its customers Monday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.
The airline will then resume full operations on the route on September 20, flying three times per week on the Indian route, which is one of the most lucrative destinations on its network.
Passengers on the route will part with Sh46,000 ($419) for one-way air ticket on economy class seats from Nairobi to Mumbai- prices that are relatively the same compared to what it was charging before the Covid-19 pandemic.
“Welcome back onboard! Fly from Nairobi to Mumbai starting Thursday 16th September with normal schedules resuming from Monday 20th September 2021,” said the airline in a notice to its customers yesterday.
KQ Suspended passenger flights to and from Mumbai on April 30 until further notice, following a government directive on travel between India and Kenya due to a Covid-19 crisis in that country.
The airline said on Friday that passengers who had booked tickets after May 1, the date of the last flight from Mumbai to Nairobi, will have to change their plans.
Affected passengers, KQ said, could also take vouchers for the value of their fare for future travel within 12 months.
India has seen soaring infection rates in the recent days, since the discovery of a new virus variant. Last month, India put on lockdown one of the states following a spike in cases of Covid-19.
Other countries that have banned flights to India include France, the UK Bangladesh, Oman and Hong Kong that have banned travel to and from India or asked their nationals coming from the Asian country to isolate themselves in government-approved hotels.
India has so far detected 33,264,175 corona virus cases with the number of deaths hitting 442,874 as at September 13.
A large number of patients from Kenya also travel to India every year for specialised medical treatment, especially cancer care, helping to drive medical tourism in the densely populated country that boasts affordable and easily accessible healthcare.
Lower import volumes push mitumba prices to new highs
- Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
- Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
- Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.
The average price of a tonne of second-hand clothing items imported into the country crossed the Sh100,000 mark for the first time last year on reduced volumes in the wake of safety protocols and guidelines to curb spread of coronavirus.
Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.
Last year’s drop was the first dip since 2011 when 76,533 tonnes were shipped in compared with 80,423 tonnes the previous year, the official data collated by the Kenya National Bureau of Statistics (KNBS) shows.
The import bill for the merchandise amounted to Sh12.24 billion, a drop of 31.11 percent, or Sh5.53 billion, year-on-year.
TIn imposing the temporary ban on used clothes, Kebs had applied a standard which prohibits buying second-hand clothes from countries experiencing epidemics to ensure disease-causing microorganisms are not imported into Kenya.
Higher quality and relatively lower prices for mitumba has continued to drive demand for used clothes at expense of locally-made products amid higher margins enjoyed by traders largely operating in informal markets.
The lucrative second-hand clothing market has seen traders from China —a key source market for the merchandise —open shops in Gikomba, Kenya’s largest informal market for mitumba, in recent years to cash in rising demand.
Earnings from exports of articles of apparel and clothing accessories fell 5.32 percent to Sh32.92 billion last year compared with 2019, data indicates.
Court backs Atwoli union in horticulture membership feud
- A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
- Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.
A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.
Mr Atwoli is the secretary-general of KPAWU. The rival union claimed KPAWU had encroached on its area of workers’ representation.
Justice James Rika, however, dismissed the claim and ruled that the dispute should have been taken through conciliation, and was therefore presented in court prematurely.
He also stated that Kefhau must go beyond its registration and recruit sufficient members from the employers, to be granted recognition and organisational rights.
“Registration on its own, does not afford the claimant (Kefhau) recognition. Until there is proof that Kefhau has satisfied Section 54 of the Labour Relations Act, the status quo must be maintained,” said the judge.
“Kefhau must recruit at least 50 percent plus one, of the unionisable employees in the floriculture and horticulture industry, members of the Agricultural Employers Association to be considered for recognition,” he stated.
He noted that there is a Recognition Agreement and CBA, binding Mr Atwoli’s union and Agricultural Employers Association, affecting 73 Flower Growers Group of employers, and over 60,000 employees.
“It is objectionable for Kefhau to be allowed organisational rights, and the legitimacy to receive trade union dues and agency fees, from over 60,000 employees, just on the strength of registration as a trade union,” said the judge.
Kefhau wanted the court to declare that it is the sole trade union, which is allowed by its constitution to carry out activities in the export floriculture and vegetable industry, and an order restraining Mr Atwoli’s from representing workers in that area.