Electronic Initial Public Offerings to Commence in Nigeria in 2019

By Goddy Egene

The nation’s capital market will begin to witness the issuance of electronic initial public offering from 2019.

The Acting Executive Commissioner, Corporate Services, Securities and Exchange Commission (SEC), Mr. Henry Rolands, disclosed this while speaking at the SEC Journalists Academy in Uyo, Akwa Ibom State.

 IPO is the selling of securities to the public in the primary market by a company, while e-IPO is the selling of such shares via electronically as opposed to the usual manual issuance.

Although many jurisdictions have adopted e-IPO, Rowlands said that it will become operational in Nigeria next year.

According to him, Nigeria must move forward with its contemporaries in technology in order to compete effectively, saying that  preparations  towards  full automation of IPO and other public primary offers in the Nigerian market were on top gear.

 He noted that  special-purpose committee inaugurated for the full automation of the primary issuance process has gone far to ensure commencement of E-IPO.

 He said that the committee comprises SEC, the Nigeria Stock Exchange (NSE); Association of Issuing Houses of Nigeria (AIHN); Association of Stockbroking Houses of Nigeria (ASHON); Central Securities and Clearing System (CSCS); Institute of Capital Market Registrars (ICMR) and Capital Market Solicitor Association (CMSA), among others.

 Rowlands, who spoke on: “Why digitization is critical for our market- Case study: Dematerialisation, e-dividend and direct cash settlement, said the full automation of primary issuance would involve automation of the process, approval, documentation, subscription and allotment of all issues, especially IPOs and public offers.

 He noted that the initiative would enable investors to subscribe and make payment for IPOs and public offers online with such orders being matched and allotted electronically and directly to the investment accounts of the investors in CSCS.

 He said  the commission would remain committed to operational efficiency.

 Rowlands said that the Nigerian capital market must be competitive with the global trends and market for enhanced growth and development.

 He said that technology and digitisation would drive the next space of global economy growth.

 “The next phase of capital market growth will be driven by digitisation.

Turnover of mobile transactions in most exchanges had increased by 130 per cent in the past one year.  This the figure could double in the next two years as far as smart phones are selling,” he said.

According to him, the commission is  engaging  actively  stakeholders in line with the new trend in technology and provide the adequate regulatory framework for proper adoption of suitable technology  in the market.