The Nigerian capital market has inaugurated an online public offering platform to improve depth, convenience and accessibility.
It is the first of such initiative in Africa.
The global virtual public offerings subscription’s platform, known as X-PO, is an end-to-end, self-service portal that allows investors to conveniently subscribe and make payments for Nigerian public offers through the web and mobile (USSD), from anywhere in the world.
The portal is expected to significantly transform the primary market segment of the Nigerian capital market, removing the hassle of physical completion and submission of public offering applications forms, visiting bank for payment, delay in offering and allotment period and overall cost of issuance.
The X-PO, promoted by the Nigerian Stock Exchange (NSE), has been granted a “No Objection” approval by the Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator.
Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said the portal was designed to enhance the experiences of stakeholders in the public offerings value chain, by providing a smarter and efficient way to manage public offers in the Nigerian capital market.
The Nation recently reported that not less than N2 trillion had been raised in 10 months through the primary market or new issue market segment of the Nigerian capital market in 2020, despite the disruptions caused by COVID-19 pandemic and social unrests.
President, Chartered Institute of Stockbrokers (CIS), Mr. Olatunde Amolegbe, said the launch of the online public offering portal represents a new vista of opportunity for capital market stakeholders as it provides the much -needed edge for the Nigerian market to compete as a choice platform for capital raising locally and internationally.
According to him, one of the major reasons issuers had always preferred to patronise the money market over the capital market is that it takes much longer to raise capital in the capital market than in the money market.
“The launch of the electronic public offering has the potential to cut that length of time down significantly thereby bridging the competitiveness gap. Secondly the platform will significantly increase retail investor participation in the market as you can now sit anywhere in the world and participate in security issuance. Thirdly, the cost of issuing securities in our market is likely to drop significantly as associated costs like printing cost and distribution among other will likely be eliminated. This has the potential to attract more issuers, big and small. I am really excited about the introduction of this much-awaited innovation into the market,” Amolegbe said.
National Publicity Secretary, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, said the introduction of electronic public offering would improve both time and cost efficiency at the Nigerian capital market.
“It simply means that interested investor can open or download, fill, make payment and submit the offer documents online at the investor’s convenience. It would reduce the cost of printing the offer document and cost of logistics in delivering documents,” Igbrude said.
He however urged stakeholders to ensure the portal remains constantly well secured to prevent fraudsters who may want to take advantage of the process to defraud unsuspecting people.
Onyema noted that the launch of the X-PO reinforces NSE’s commitment to transform stakeholders’ experience in the Nigerian capital market by leveraging technology.
According to him, the X-PO has been designed to enhance the efficiency of public offering subscription process and operational workflow to support issuers in raising capital and enhance the reach of public offerings while promoting financial inclusion and retail investors’ participation in the market.
“Furthermore, X-PO will accelerate the reconciliation and allotment process for public offerings, as well as reduce the incidence of unclaimed dividends, thereby boosting investor confidence in the capital market,” Onyema said.
He assured that the Exchange will continue to innovate and adapt to new technologies that will not only help companies improve operational efficiency, but also enhance corporate governance which is paramount for sustainable business operations.
He noted that the launch of the X-PO was particularly timely given the new normal occasioned by the COVID-19 pandemic.
He pointed out that the platform’s sustainable approach affirms NSE’s commitment to deploying environmentally friendly business practices and promoting paperless public offer subscriptions.
“We have also taken into consideration the vital need for privacy and data protection, deploying the highest levels of security to ensure that stakeholders can enjoy a safe and secure digital public offering experience,” Onyema assured.
He enthused that operators in the capital market including investors, registrars, issuing houses, brokers, banks and regulators can expect to enjoy a wide range of benefits with the launch of X-PO.