Some minority shareholders of Ardova Plc have expressed worry over the company’s intention to delist from the Nigerian Exchange Limited (NGX).
Reacting to the development in a chat with Nairametrics, the shareholders said they are deeply concerned over how oil and gas firms are speedily exiting the Nigerian bourse.
According to them, domestic retail investors always suffer significant losses whenever companies were delisted. They, therefore, noted the need for the NGX to provide more information on how investors can be protected.
The planned delisting: In case you missed it downstream oil and gas company, Ardova Plc, announced on Tuesday that it intends to delist as a publicly listed company.
The company said it was approached by its parent company, Ignite Investments & Commodities Limited, who wishes to acquire the shares held by other shareholders at an offer price of N17.38 per share.
Ignite Investments & Commodities Limited currently owns 74% of Ardova Plc and is the majority shareholder of the company.
Share price performance: The news of the planned delisting sparked negative sentiment on the shares of Ardova leading to the share price dropping by 4.25% at the close of the trading session.
Checks by Nairametrics showed that the company’s stock price dropped to N16.90 per share at the close of trading yesterday from N17.65 it opened the previous trading session, representing a drop of 4.25% or N977 million.
Further analysis showed that Ardova Plc closed the trading day with N22.011 billion in market capitalization as against N22.988 billion the previous day.
Shareholders are unhappy: Reacting to the development, the President of the New Dimension Shareholders Association, Mr Patrick Ajudua, told Nairametrics that shareholders are not happy over the spate of delisting on the NGX, particularly by the oil and gas firms. He said:
- “We have seen the delisting Of Mobil, the proposed delisting of Oando and now Ardova. The delisting is akin to a father seeing his children dying during his lifetime where as it ought to be the children burying their father.
- The regulators should look at this development from that point of view because if the companies are no more who are going to regulate, it becomes a question.
- For us as shareholders, we are investing in these companies for future returns on our investments, but what we are seeing is an act of shortage in our investment plan via delisting.”
Need for engagements and reviews: Ajudua called on the regulators to engage all the companies not just the oil and gas firms to find out the factors inhibiting the growth and sustainability of their businesses.
- “Some of those factors that are still under the purview of regulators, such as the high cost of filing their returns, which has become extremely high and also the increase in VAT tax on share purchase and sales should be discontinued because before it was not there but it was brought back via finance act.
- “Also high penalties being charged on companies for regulators’ infractions are also hurting the companies. There is an unfriendly business environment in the oil and gas sector, the NNPC is both the regulator and competitor, leaving them with only a small margin which can’t cover their cost of operations which makes it difficult for them to pay dividends to shareholders.
- “Unfriendly government policies are also driving the companies away, this is because there are no enabling laws to guide the foreign investors’ repatriation of their returns, hence discouraging foreign portfolio investments to the capital market,” he said.
Need for investors’ protection: Also, the Chairman of the Progressive Shareholders Association of Nigeria, Mr Boniface Okezie, said that market regulators must pursue friendly policies and initiatives to push the market forward.
- “Delisting is not good for the market. When they leave, it will prevent the market from playing the role of a barometer of the economy. It discourages minority shareholders to invest more in the stock market, “he said.
He noted that the current leadership of the SEC and NGX have done well with the introduction of various initiatives and zero tolerance on fraudulent capital market operators but they should do more to protect minority shareholders anytime a company is delisting from the market in order not to shortchange them.
