MRS: 25th to Delist from the NGX
The Board of Directors at MRS Oil has proposed to delist the company’s shares on the Nigerian Exchange Group (NGX) trade list.
If this proposal comes through, the company becomes the 25th company to exit the NGX voluntarily.
Delisting here means a company will no longer sell its shares to the public on a stock exchange. This can occur either voluntarily or mandatorily. Common reasons for delisting include a company ceasing operations, declaring bankruptcy, merging with another entity, failing to meet listing requirements, or opting to go private.
In the last 22 years, 24 companies were voluntarily delisted from the Nigerian Exchange Group. These include Nigerian Bottling Company Plc., Nigerian Textile Mills, Dangote Flour Mills Plc, and others.
Companies that have been delisted from the Nigerian Exchange Group have done so due to several reasons.
An analysis of the delisted companies data on the Nigerian Exchange Group shows that 78 or 65.6% of the total delisted 119 companies since 2002 were either directly delisted by the National Stock Exchange (NGX), the Central Bank of Nigeria (CBN), or NASCOM.
This is followed by companies that voluntarily delisted, accounting for 20.2% of the total figure.
Other reasons for delisting are either as a result of the merger or acquisition of one company by another entity, ownership transition from private to state, or withdrawal of license.
As the Explanatory Circular stated, “the voluntary delisting is expected to enable MRS Oil to strategize more efficiently for improved operational performance. It will provide the flexibility to engage swiftly in transactions and alliances that could enhance earnings and add significant value, all while reducing costs and maintaining competitiveness within its industry.”
Listing a company on a stock exchange offers several benefits, including increased access to capital by issuing shares to a wide range of investors, enhanced public visibility and credibility, improved shareholder liquidity, and the potential for a higher valuation due to market exposure.
The regulatory oversight and disclosure requirements associated with being publicly traded can also enhance corporate governance and transparency, boosting investor confidence.
However, companies may opt to delist their shares voluntarily as a result of internal activities or evaluations that may demand that they go private.
In the circular, MRS stated further: “The Board of Directors proposes to de-list 342,884,706 ordinary shares from the daily official list and trading on the Main Board of the Nigerian Exchange Group due to strategic reassessment of the Company's status, regulatory obligations, administrative and compliance costs, emerging opportunities, evolving market conditions, and projected long-term financial and operational growth.”
The consequences of delisting can be significant, as shares not traded on major stock exchanges may become more difficult for investors to research and purchase. This may limit the company's ability to issue new shares to the market or hinder its capacity to raise capital for new financial initiatives.
FG Launches Portal for Housing Scheme
The Federal Government through the Federal Ministry of Housing and Urban Development has launched the Renewed Hope Estates and Cities to improve the access to mortgage plans to Nigerians.
It also opened its portal to facilitate information to the public on benefiting from the plan.
This initiative aims to address the housing deficit in Nigeria and enhance access to housing for Nigerians, both at home and in the diaspora.
“To kick off, the program will cover all 36 states and the FCT, the pilot phase aims to construct 100,000 housing units nationwide, which will be made available to low- and middle-income groups through options such as outright purchase, mortgage, and rent-to-own schemes” the Federal Ministry of Housing and Urban Development stated.
While this seems like a positive move towards addressing the housing shortage in Nigeria, it is crucial to consider the affordability of these homes to ensure they truly benefit the wider population, especially those from the lower-income group.
In Nigeria, access to affordable housing has largely remained an unfulfilled dream for the vast majority, particularly for the middle and lower classes of society.
Ensuring that the housing options are within the financial reach of average Nigerians is crucial for the initiative to have a meaningful impact on reducing the housing shortage.
According to data from the Central Bank of Nigeria and the Federal Mortgage Bank of Nigeria, the housing deficit in Nigeria has worsened by 300% in the last 32 years from 7 million in 1991 to 28 million units in 2023.
This shows that there is a pressing need for comprehensive and sustained efforts to address the housing crisis in Nigeria.
Given the significant housing deficit in the country, an estimated N21 trillion is required to provide enough housing units to meet the demand. This means that the real estate sector needs an investment of over N21 trillion to build sufficient housing for the entire population.
Thank you for reading this edition of Marina and Maitama. It was written by Funmilayo Babatunde and edited by Oluseyi Olufemi.