First Bank, Zenith, UBA, 7 others for London Stock Exchange

Ten Nigerian banks, including First Bank, Zenith Bank, United Bank for Africa (UBA) and Oceanic Bank International, will form the fulcrum of a strategic move by the Nigerian Stock Exchange (NSE) to get Nigerian companies listed on the London Stock Exchange, one of the most hyped bourses in the world.
GODFREY OBIOMA & Kunle Mayadenu

If this push by the NSE materialises, it will herald the effective arrival of Nigerian companies on the stage of international capital finance market, where there shares can be traded. London is particularly seen as the world’s financial capital with a stock market that attracts interest from companies in North America, Europe, Asia and the Middle East.

The NSE is expected to begin the strategic move when it showcases the 10 banks next month at an LSE investors’ gathering in London.

Farooq Oreagba, managing director, NSE Consult and head of strategy and derivative, of the Exchange told Business Day in an interview that when the idea of trans-border listing on the LSE was muted, the leadership of both Exchanges agreed that some Nigerian listed companies should be made to display their facts-behind-the-figure to international market operators.

Subsequently, the NSE selected 10 banks to be showcased on the LSE.

The banks already pencilled for the international market exposure are First Bank, Union Bank, Zenith Bank, Oceanic Bank, UBA, Intercontinental Bank, GTBank, Afribank, Ecobank and Access Bank.

The choice of these banks was based on their impressive market fundamentals, which are expected to excite offshore fund managers, stock brokers and regulatory agencies, analysts have said.

For example, First Bank reported earning per share of N2.96 in 2004, N2.61 in 2005 and N3.08 in 2006. For Union Bank, it was N1.80 in 2004, N1.65 in 2005 and N1.62 in 2006. Zenith Bank has price earning ratio of 13.71 times in 2005, 13.03 in 2006, and 17.41 as at the second quarter of 2007.

GTBank recorded PE ratio of 15.38 times in 2004, 12.27 in 2005 and 12.64 in 2006.

Zenith Bank currently has the highest market capitalisation of N443-billion; UBA N321.8-billion; GT Bank N304.9-billion; Union Bank N318.3-billion; Oceanic N227.3-billion, while Intercontinental Bank has a market capitalisation of N278.8-billion.

The showcasing of the banks on the LSE next month has been chosen to coincide with an international event that would attract fund managers from around the world. This is designed to be a precursor to the listing of these financial institutions on the LSE.

If the banks pass the first stage of the test, they would be expected to meet some listing requirements of the Exchange.

Although the market capitalisation of these banks do not measure up to those of companies listed on the LSE and emerging markets like South Africa and Egypt, analysts believe that they may be favoured in view of the rising international confidence in the Nigerian economy. Recently, the Standard and Poor’s and Fitch, two international rating agencies, assigned BB- ratings to the economy. These have largely contributed to an increased inflow of foreign equity capital into the country.

A growing understanding in the global arena that the Nigerian market is still grey, waiting to be harnessed is also expected to boost the fortune of locally quoted companies.

So far, only two instruments have enjoyed trans-border listings. These are the UBA Global Depository Receipts, listed on the New York Stock Exchange and OANDO, trading on the Johannesburg Stock Exchange.

Market watchers believe that the listing of more Nigerian companies abroad would further expose them to international investment best practices and re-channelling of global investment into the country.

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