In a significant development for the Nigerian stock market, the planned delisting of prominent companies is set to result in a substantial reduction of approximately N205.002 billion from the Nigerian Exchange Limited (NGX) equities capitalization.
This move follows closely on the heels of Ardova Plc’s delisting, which saw the removal of 1.31 billion shares on July 26, 2023, resulting in a loss of N21.49 billion in market capitalization at that time.
Among the companies slated for delisting are GlaxoSmithKline (GSK) Plc, PZ Cusson Plc, Oando Plc, Coronation Insurance Plc, and Capital Hotel Plc.
GSK and PZ
The potential delisting of GSK, which recently announced its intention to cease operations in Nigeria, is expected to have a particularly notable impact, accounting for a market value loss of N15.49 billion.
GSK’s decision to withdraw from the Nigerian market was conveyed last month, with the company citing its evaluation of options for transitioning to a third-party distribution model for its pharmaceutical products.
Although the official reasons were not stated, economic experts have linked this decision to challenges such as foreign exchange (Forex) scarcity and Forex losses stemming from the devaluation of the Naira.
The challenges in the business environment, particularly regarding Forex availability and the settlement of foreign currency-denominated trade payables with product suppliers, were highlighted in GSK Nigeria’s H1’23 report.
These challenges made it difficult for the company to maintain consistent supply to the market.
PZ Cusson, on the other hand, has announced its plans to buy out minority shareholders.
This move, which will result in delisting, is aimed at streamlining and strengthening operations in Nigeria, with a focus on building a more agile and innovative business.
Oando Plc, with a market value of N87.02 billion, has decided to delist due to a series of legal disputes over ownership interests involving the company’s management and minority shareholders.
Coronation Insurance, with a market capitalization of N14.4 billion, has opted for an exit from the NGX following an offer from Coronation Capital (Mauritius) to acquire shares at 65 kobo per share, along with a subsequent delisting from the exchange.
Capital Hotel Plc, with a market value of N8.692 billion, has also expressed its intention to delist in order to explore strategic opportunities, alliances, and collaborations that can enhance earnings and provide synergistic benefits with reduced regulatory obligations.