A total of 17 listed companies rushed to the capital market to raise and list N6.135 trillion on the Nigerian Exchange (NGX) Limited through equity capital for operational expansion in 2024.
Capital is critical for business growth. Companies can raise capital through debt or equity. Debt is issued in the form of bonds, and equity is issued in the form of shares. When a company issues new bonds or common stock, it is referred to as a new issue.
The stock exchange, as an important component of the capital market, plays a significant role in the capital formation process because of the tremendous opportunities that ensue from its activities. The exchange is expected to mobilize long-term savings to finance long-term investment by providing risk capital in the form of equity or quasi-equity to entrepreneurs.
New issues are savings mobilised for investment purposes by companies and governments. The new issues market represents the primary arm of the capital market and shows how many financial resources are invested in long-term securities of corporate bodies and governments.
The listing of new issues in the market will deepen the market, improve liquidity and tradability of companies’ shares. Also, it will increase access to capital in order to fund companies’ future growth initiatives.
Data obtained from the NGX showed that in 2024, the market saw 17 companies listing new issuances, buoyed by new listing and supplementary listing, bringing the total value of equity issues to N6.135 trillion.
Under new listing, Haldane McCall listed by Introduction of 3.122 billion shares valued at N11.988 billion. Aradel Holdings listed a total 4.345 billion shares worth N3.053 trillion, while Transcorp Power listed 7.5 billion shares valued at N1.8 trillion on the NGX.
Under supplementary listing, Jaiz Bank listed N10.048 billion through private placement. Nigerian Breweries raised N548.733 billion through right issues, while C&I Leasing listed N822.917 million through debt-to-equity transaction.
Japaul Gold and Ventures, International Breweries, Notore Chemical Industries, Wema Bank, Tantalizer, Multi-Trex Integrated Foods, Cadbury Nigeria, Royal Exchange, VFD Group, Ellah Lakes and Sovereign Trust Insurance listed N20 billion, N516.218 billion, N105.792 billion, N39.946 billion, N1.073 billion, N2.5 billion, N7.036 billion, N1.561 billion, N12.499 billion, N2.186 billion and N1.432 billion respectively.
Analysts noted that the new issuances have contributed to the deepening of the market, and more listings will further enhance market depth.
A senior stockbroker, Tunde Oyediran, said that the new issues listed on NGX in 2024 were raised due to the improvement in the stock market.
He pointed out that the impact of the primary market activities on any market cannot be overemphasised, adding that it deepens and expands the market.
This, according to him, has contributed to increase in the market capitalisation and overall growth of the market.
“This signal is good for the market; no capital market in the world grows the market only on secondary market activities. The recent increase in activities through right issues of companies and new listing of Transcorp Power and the others, are an indication that investors have realised the importance of long-term investment in good companies that have future prospects,” he stressed.
The chief operating officer of InvestData Consulting Limited, Ambrose Omordion said that the deregulation of the capital market has enhanced the competitiveness of the capital market.
Meanwhile, the director-general of the Securities & Exchange Commission (SEC), Dr. Emomotimi Agama stated that, the commission’s preparedness to improve the regulatory framework with regards to borrowing by governments and corporates.
He noted that for corporates, the commission was changing the landscape with the new rules on Central Counter Parties (CCPs), adding that, the new rules on CCPs had become so critical for Nigeria’s development, especially for corporates in raising capital.
“As a Commission we have established those new rules and they are going to be functional in 2025. We want to make borrowing a seamless and effortless process for Nigerian companies.
“It is very important that as we drive the growth of the Nigerian capital market, we also drive new products and new opportunities for every Nigerian. Nigeria for a long time has been seen as a mono product market, but the Year 2025 will be different because we will continue to drive the process of introducing derivatives into the capital market,” he said.