The Nigerian Stock Exchange launched the Alternative Securities Markets, ASeM, for emerging businesses in Lagos State on Tuesday.
The NSE said that the newly inaugurated securities market is particularly for emerging companies with high potential for growth in Nigeria. According to the Exchange, the ASeM will be a specialised board on the Nigerian Exchange where small to mid-sized companies can access the capital market under less stringent rules and requirements to raise long term, low cost capital.
The NSE revealed early this year that part of its major focus would be Small and Medium Scale Enterprises via the launch of its Alternative Securities Market; as such companies remained the drivers of growth in the Nigerian economy.
The Executive Director, Business Development of the Exchange, Haruna Jalo-Waziri, said the Nigerian Stock Exchange is a staunch believer in the critical role of emerging enterprises in a developing economy. He said the Exchange has taken the move of providing a platform for sustainable growth and development of these companies.
The ASeM Board will allow issuers, especially indigenous companies, the opportunity to inject relatively low cost and long term capital into their businesses through flexible rules that recognize their growth potential rather than the size of operation."
The Exchange had earlier in the month designated advisers for the ASeM who will provide professional resources to qualifying companies for guidance and advice on securities- related matters. This was after issuing a circular to dealing member firms two months ago, asking them to indicate their interest in becoming Designated Advisers to companies listed on or seeking listing to the ASeM.
The designated advisers include the ARM Securities Limited, BGL Securities Limited, Capital Asset Limited, Cardinal Stone Securities Limited, EDC Securities Limited, Fidelity Securities Limited, and FSDH Securities Limited. Others were Investment One Stockbrokers International, Magnartis Finance & Investment Limited, Marina Securities Stockbroking Services, Morgan Capital Securities Limited, Partnership Investment Company Limited, Primera Africa Securities Limited and UBA Stockbrokers Limited.
The selection process centered on the those that are dealing members of the Nigerian Stock Exchange with expertise on Corporate Finance and Investment; In-Depth Knowledge of Capital Market Rules and Operations; Intimate Acquaintance with the Disclosure and Listing plus Post Listing Requirements of The Exchange.
They were also cleared by the Securities and Exchange Commission, SEC, and went through a screening process carried out by the NSE which took into account their Compliance History, Transaction Profile and Track Record of Subject Matter Experts (SEPs) presented by the Firms.
The access to capital needed to finance acquisition of facilities required to compete effectively with foreign companies has been a major problem of indigenous companies in the manufacturing and petroleum industry.
"This is a good development," Ola Yussuff, CEO, Trust Yield Securities Limited, said. "It is a good development, not only for investors, but also the issuers. Everybody should be interested in it," he added.
According to him, there are some small and medium scale businesses that are being run well, and people would want to invest in, should they have the platform to do so.
"They may not be so big, but they are being run well. People are using their products and would be willing to invest in them. On the other hand, these businesses can also use this opportunity to raise new capital. With such, they can expand their businesses. At the end, both sides should be happy," he said.
The Securities and Exchange Commission (SEC), on behalf of the Federal Government, approved the commencement of the new Alternative Securities Market in 2010. The objective was to enable operators and in particular indigenous companies, who could not meet all listing requirements, to take advantage of the capital market.
Established Stock Exchanges usually embark on the alternative market option to aid smaller firms, The London Stock Exchange for instance has a sub-market which allows smaller companies to float shares with a more flexible regulatory system than is applicable to the main market.
Alternative markets are usually structured in a way that would enable companies to take full advantage of listings, as such, they could migrate to the main market as soon as it is practicable.
The AIM (London's sub-market) launched in 1995 has reportedly raised almost £24 billion for more than 2,200 companies. The irony, however, is that in 2005, it was reported that 40 companies moved directly from the Main Market to the AIM, while only two companies moved from the AIM to the Main Market.