Nigerian Exchange explains why one of its substantial investors is selling down shares

The Nigerian Exchange Group (NGX) said that one of its major shareholders, the Miri Strategic Emerging Markets Fund LP, has been reducing its shareholdings in the local bourse.

The decision to reduce its shareholding was made because Miri Strategic’s current holdings exceed the maximum requirement of 5% set by the apex regulator. By selling down its shares, Miri Strategic will be able to comply with the regulatory limit and ensure that its holdings are within the acceptable range.

The Chief Executive Officer of NGX Regulation Limited, Tinuade Awe, who stated this during NGX Group’s FY 2022 Investor and Analyst Conference Call, disclosed that the substantial shareholder has sold about 2.574 million units of shares worth N739.3 million so far.

The regulatory requirement: Awe noted that under SEC’s rule of demutualization, no one entity can hold more than 5% of the shares of NGX Group because of the peculiar nature of NGX as an entity that demutualized. She said:

• “Yes, we did notice trading activities from this substantial shareholder because we have rules that require issuers including the group to disclose sales or purchases by substantial shareholders and all insiders. And so this trade was reported to us and we looked at our rules to look whether there were any contraventions as we do when we get reports from all other companies, and we didn’t notice any contraventions. 
• “I should say that this particular shareholder according to our record as a regulator of the NGX market is a substantial shareholder that held at the time he started this trade above 5% of the shares of the group- the issuer company.  
• “And under the SEC rule of demutualization, no one entity can hold more than 5% of the shares of NGX Group because of the peculiar nature of that company as an entity that is demutualized. There are specific SEC rules that apply to them. So when we noticed this we requested that there should be sold down, we informed the issuer that there is the need for sell down so we were not surprised when we started seeing sell down.”

Closed period: Awe noted that what the NGX Regulation did look out for was to ensure that the time sell-down was happening wasn’t during a close period which is a time when an insider cannot sell.  

• “So we observe that that was not the case and we will continue to look at the market to ensure that everything was done in accordance with the rules of SEC and NGX,” she said.  

Equity holdings: NGX Group recently notified investing public, of The Miri Strategic Emerging Markets Fund LP’s acquisition of 7.48% shareholdings of the NGX Group Plc. 

This was disclosed through a notice signed by the Group’s company secretary, Mojisola Adeola, and filed with the exchange. 

According to the notice “Further to the provisions of Rule 17.13 of the Rulebook of The Exchange, 2015 (Issuers’ Rules), we write to formally notify Nigerian Exchange Limited (NGX) and the Market that The Miri Strategic Emerging Markets Fund LP (Miri Fund)’s total shareholding in Nigerian Exchange Group (NGX Group) as at 20 June 2022 stands at 7.84% of the Issued share capital of NGX Group. This is being held through a nominee company”.