Great Nigeria Insurance Plc (GNI) has attributed its planned delisting from the Nigerian Stock Exchange (NSE) to the inability of the majority core investors to dilute their shareholdings to free up more shares for minority retail investors.
The company also revealed that over the last five years, there has been little trading activities on the shares held by the minority shareholders, noting that there has also been a significant fall in trading volumes of it shares over the last 12 months with an average daily volume of about 1,200 shares between March 2017 and last March.
The company further noted that the free float currently stands at 16.03 percent, significantly below the NSE’s minimum free float of 20 percent for a company listed on the main board of the Exchange.
What free float means
The free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associated companies, directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is fifteen percent and above in Nigeria.
Companies listed on the stock exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities.
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The free float requirement for companies on the Alternative Securities Market (ASeM) Board is 15% of market capitalisation, Main Board is 20% of market capitalisation while companies on the Premium Board is 20% of market capitalisation or above N40 billion on the date the Exchange receives the Issuer’s application to list.
Although, the Quotations Committee of the National Council of the Exchange has extended the timeline for the company to free up more shares to May 2020, the company noted that it may not be able to improve its free float within the period.
“We do not expect that this deficiency will be cured during that period and we expect the NSE to initiate a regulatory delisting,”
Insurance Resourcery and Consultancy Services Limited (IRCSL), which owns majority equity stake in the company, has expressed willingness to pay a cash consideration of 50 kobo per share for every share surrendered by minority shareholders. The exit price of 50 kobo is based on the highest price of 50 at which GNI has traded in the last six months.
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Great Nigeria Insurance Plc commenced business in 1960 and following Central Bank of Nigeria (CBN)’s directive that required banks to either divest from non-core banking subsidiaries or form holding company to hold those subsidiaries; Wema Bank divested transferring its 75% equity stake in GNI Plc to Insurance Resourcery and Consultancy Services Limited.