NASD targets N12 billion in rights issue to fund technology push, market expansion

The National Association of Securities Dealers (NASD), Nigeria’s over-the-counter securities exchange, has launched a N12 billion rights issue to strengthen its capital base and position itself for its next growth phase as a composite exchange.

NASD Chairman Kenechi Ezezika disclosed the strategic rationale for the recapitalisation, describing it as a pivotal moment in the Exchange’s evolution.

The offer comprises 480 million ordinary shares of N1 each at N25 per share, with shareholders entitled to four new shares for every five existing shares held at the qualification date.

If fully subscribed, the offer will raise N12 billion in gross proceeds and provide NASD with additional capacity to invest in technology, infrastructure, talent and market-development initiatives.

NASD targets technology-led market expansion:

Ezezika said the capital raise would provide the capacity needed for NASD’s next phase of growth as market expectations around efficiency, transparency and technology continue to change.

• “This transaction is about building the capacity NASD needs for its next phase of growth.”
• He said capital markets are evolving rapidly, while issuers and investors increasingly expect markets that are efficient, transparent and supported by strong technology.
• Acting Managing Director and Chief Executive Officer Arese Ugwu described the recapitalisation as an institutional investment rather than simply a regulatory requirement.
• Ugwu said the capital would support investment in infrastructure, technology and talent required to deepen market participation, develop new markets and strengthen NASD as a platform for capital formation.

Ugwu also highlighted NASD’s transition toward composite-exchange status as a catalyst for broadening its role in Nigeria’s capital-market ecosystem and serving a wider range of issuers and investors.

How NASD will deploy Rights Issue proceeds:

The N12 billion offer is expected to generate net proceeds of approximately N11.724 billion after estimated transaction costs of N275.875 million. NASD has outlined a three-part deployment strategy for the funds.

• N3.25 billion, representing 27.08% of net proceeds, will be allocated to working capital over 18 months.
• N300 million, representing 2.50%, will be used for cloud trading systems and support over 12 months.
• N8.174 billion, representing 68.12%, will be allocated to portfolio investments for market development.
• The allocation places emphasis on technology infrastructure while reserving the largest portion of the proceeds for future market-development initiatives and strategic investments.
• Anchoria Capital Group is leading the rights offer as Lead Issuing House, while Greenwich Capital Markets Limited, Capital Bancorp Plc and Capital Assets Limited are serving as Joint Issuing Houses.

Subject to regulatory approval, the offer is scheduled to open on Monday. Group Managing Director of Anchoria Capital Group Sam Chidoka said the firm would work to ensure an efficient process and broad shareholder participation, while Managing Director of Anchoria Advisory Damilola Titiladunola confirmed the Monday opening date pending final regulatory clearance.

NASD positions for composite exchange growth:

If fully subscribed, the rights issue will increase NASD’s issued shares from 600 million to 1.08 billion ordinary shares.

• At the N25 issue price, the enlarged share base implies a post-issue market capitalisation of N27 billion.
• The recapitalisation signals NASD’s focus on the capital-market recovery momentum highlighted in the supplied material, including the Dangote IPO, FTSE Russell inclusion and recent CBN rate cuts.
• The 68.12% allocation to portfolio investments also gives NASD flexibility to pursue future market-development opportunities, including acquisitions, partnerships or platform expansions, as market conditions warrant.

For existing shareholders, the four-for-five rights issue provides an opportunity to maintain their proportional ownership by taking up their entitlement, while the enlarged share base increases the number of shares in issue by 80%.