Business Hilights
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‘Punish firms that undertook private placement but failed to list on Exchange’

Nigerian investors in private placements has raised alarm, calling on the regulator, the Security and Exchange Commission (SEC) to recover their money or force companies who had done private placements to get listed on the Nigerian Stock Exchange so that they can gain from their investments.

Business Hilights investigations have revealed that there are several companies which had undertaken private placement during the stock market boom period and tied down peoples funds without listing the shares on the Exchange.

Majority of the firms were successful in their bids and sourced over N700 billion, but a large portion of the money was diverted into other investment outlets outside the objectives declared in the prospectuses.

Experts say such listings would have generated returns as stated in the prospectuses.

In a recent public forum, the President, Nigerian Shareholders Solidarity Association, Timothy Adeshinwo recalled that between 2007 and 2009, several companies deceived investors to take equity interest in their firms through private placements.

He said these firms lured investors with the promise that their shares would be listed on the floor of the NSE after a period of time. But seven years down the line, they have defaulted.

Citing IGI as an example, he alleged the firm had been holding its yearly meetings behind closed doors, and unannounced, while the participants are not the real shareholders of the company.

 “They promised to list under one year and that at the completion of the issue, they would list the shares on the NSE. It was on their undertaken. They should fulfill their promise. They have been holding annual general meetings and they will not call shareholders.

The victims further maintained that the situation has created much liquidity problem for the equities segment and further depressed the market, as these retail investors do not have the purchasing power to patronise the market.

In their submission, if part of the money is recovered and deployed to the stock market, the bourse would have the needed funds to spur activities in the market, attract more investors and bolster the economy. They added that the funds, if ploughed back, would also mitigate the proliferation of ponzi schemes in Nigeria, because investors would channel their money to the market.