By Goddy Egene

Stakeholders who are hoping to buy the shares of the Nigerian Stock Exchange (NSE) during its planned demutualisation should have a rethink, as it may take longer time before the existing owners of the Exchange would sell their shares to the investing public.

The demutualisation is top on the agenda of the Council of the Exchange and it has already set a committee on the issue. The apex regulator of the capital market, Securities and Exchange Commission (SEC) last week also set up a Committee on demutualisation.

However, THISDAY checks have revealed that contrary to expectation that the shares of Exchange would be sold to the investing public soon after its demutualisation, the Council might adopt a phased demutualisation method.

Demutualisation is making a mutual company become a publicly traded company that is listed on an Exchange. A mutual company is a company owned by its members or users for their benefit.

But in demutualisation, the members give up their rights and receive shares in the company in return, which they may decide to sell. There are some companies (Exchanges) that have demutualised have remained private corporations.

Competent market sources told THISDAY last Monday that the NSE might become demutualised and not sell its shares immediately.

“Given the high level interest and some issues surrounding the demutualisation exercise, the Exchange is thinking of a phased demutualisation process. What that means is that the Exchange will be made to shed its mutual status but the shares would still be held by the current owners for a considerable period of time before the organisation would be open to the investing public,” a source said.

The Chief Executive Officer of NSE, Mr. Oscar Onyema, had in an exclusive interview last July alluded to a possible phased demutualisation.

“Having gone through that process before myself, I can tell you that demutualisation is not something you do in a couple of months and you achieve it there are so many things you need to do. When you are fully demutualised you just change your corporate structure from being a mutual company to a company that is guaranteed by shares.

“It does not mean that you are doing an Initial Public Offering, a strategic investment or having a private equity firm invest in you. There are different ways of doing it. There are Exchanges that demutualise and for many years only their members have shares before they finally did an IPO,” he had said.

According to him, the reason it was important to demutualise as quick as possible was to allow the Exchange run like a business. He added that demutualisation would ensure them the flexibility in terms of financing.

“If we need to raise capital, we should not be limited to only been able to borrow from banks. We should be able to issue bond or go to the capital market if we want to or do other type of things like strategic transaction, which, because of our corporate structure today, cannot do it,” he said.

Source: Thisday