Within the next two months, the Bureau of Public Enterprises (BPE), plans to make public share offerings for some of the privatised state-owned enterprises, in which the Federal Government had diluted a significant amount of its equity.
Among those scheduled for initial public offerings (IPO) are; Indorama Eleme Petrochemicals Limited; Skyway Aviation Handling Company Limited (SAHCOL), 100 per cent owned by the Sifax Group; and Nicon Insurance Limited.
Under the plan, the IPO for the shares of the Nigerian Machine Tools (NMT), Osogbo, Osun State, will be done next year, BPE Director, Development institution and National Resources, Mr. Joe Anichebe, told journalists on Saturday, at a seminar in Abeokuta, Ogun State.
Responding to why many years after the divestment, the Government has not been able to offer the shares of some of the privatised SOEs or list them on the Nigerian Stock Exchange, Anichebe explained, it was a risk the BPE could not afford, as many of the SOEs were not profitable.
“You know that the first rule to listing on the Exchange is that you have to be profitable, and we don’t want to risk the money of poor Nigerians by offering IPOs for those companies when they are not being profitable,” he reminded journalists.
However, equity market investors are not particularly enthusiastic about the proposed IPOs, saying the offers will be coming at inauspicious time, considering it’s the peak of political uncertainties which had caused persistent downturn in stock market.
They would prefer the BPE deferred the IPOs to enable investors prepare for the offers for increased and enhanced participation.
The former Secretary General, Independence Shareholders Association of Nigeria, Adebayo Adeleke, argued that coming at this point time the IPOs may already be targeted at strategic investors, and not retail shareholders because the timing would not attract full participation from local investors.
“They cannot bring it at a time of the year when we are facing election. Why are they in a hurry to float within a month, it has been there for decades, and they want to sell off at this turbulent era, unless you have backdoor arrangement,” he said.
A Capital Market expert and Head, Banking and Finance Department, Nasarawa State University Keffi, Prof Uche Uwaleke, who noted that timing, is critical to the success of an IPO.
In his opinion, “Regarding the Eleme petrochemical, I think the BPE calendar for coming to the market is in order. This is one company that will galvanise a lot of investors’ interests in view of its potential.
“The current political situation or headwinds in the economy will not stop such an IPO from unlocking idle investible funds, including those of foreign investors, who are bound to show more than a passing interest in the offering.”
Already, the public is divided on the success of government’s privatisation programme, which began in 1986, with many calling for outright nullification, as some of the enterprises are doing poorly, and fallen short of their share purchase agreements (SPAs).