Seplat, the Nigerian oil company, is set to announce on Tuesday plans for initial public offerings in London and Lagos, marking the return of natural resources listings to the UK stock market – some of which have proved controversial.
The group, founded in 2009 by two Nigerian businessmen, ABC Orjiako and Austin Avuru, could raise at least $350m by selling new shares, giving it a market capitalisation of $1.5bn to $2bn, according to people familiar with the situation. If the company were to succeed in its fundraising, it would be the largest oil industry IPO in London in several years.
Emerging countries are once again lining up to list their shares in the UK, after several contentious deals during the past decade. The flotations of ENRC of Kazakhstan and Bumi of Indonesia in the 2000s tarnished the reputation of the City of London. Controlled by foreign tycoons and lured to London by persuasive bankers, each was allowed to list despite a poor record in regard to corporate governance.
Since then, the UK Listing Authority, which acts as the gatekeeper for the London Stock Exchange, has tightened rules for IPOs, but largely for so-called premium listings. Seplat would list its shares on the main board, not by means of a premium listing. The company nonetheless intends to float at least 25 per cent of its shares, reducing the influence of its main shareholders.
In the cases of ENRC, Bumi and several other resource groups, tiny free floats, coupled with large controlling stakes held by oligarchs, reduced the influence of institutional investors.
Seplat will remain incorporated in Nigeria, so it would not be eligible to join the benchmark FTSE 250 index, people familiar with the situation said.
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