Bloomberg News

Nigeria Bourse Targets $1 Trillion Market Value in 5 Years

June 28, 2011

(Updates with index closing level in eleventh paragraph.)

June 28 (Bloomberg) -- The Nigerian Stock Exchange, whose index has tumbled 67 percent from its March 2008 peak, is targeting a market value of $1 trillion in five years as it attracts companies and plans to give shares to members through demutualization, Chief Executive Officer Oscar Onyema said.

“Our goal is to grow our market capitalization from $74 billion to $1 trillion in five years,” Onyema said in an interview in Moscow today. “If we can attract the oil and gas sector, if we can attract the telecoms sector and power sector then we should be able to hit those numbers.”

The bourse, whose index is sub-Saharan Africa’s third-worst performer over the past 12 months after Kenya and Botswana’s, is the second-biggest by market capitalization after South Africa’s, which has a value of $494 billion, according to data compiled by Bloomberg.

Nigerian President Goodluck Jonathan has asked the nation’s Securities and Exchange Commission to get oil exploration and telecommunications companies to trade their shares on the exchange, Arunma Oteh, the regulator’s head, said on Feb. 7.

Oil exploration, power and telecommunications companies aren’t represented on the bourse and “would be totally new areas for the exchange,” said Onyema. Agriculture is “another area where we will be making a push” as it’s underrepresented on the bourse and makes up 40 percent of the West African nation’s gross domestic product, he said.

Nigerian Petroleum Listing

“We really want them because we believe a well functioning capital market is a good barometer for the economy,” Onyema said. “So where these major sectors are not represented in our capital markets today we are not giving you an accurate picture of the economic potential of Nigeria.”

Nigerian National Petroleum Corp., the state-owned oil company of Africa’s top oil producer that holds an average 57 percent stake in joint ventures with companies including Royal Dutch Shell Plc, Total SA and Exxon Mobil Corp., may list after lawmakers pass a bill to regulate the oil industry, Oteh said June 23.

Onyema is “implicitly saying that NNPC is going to get listed and hurray, let’s pop the champagne corks and get the ball rolling,” Christopher Hartland-Peel, a London-based Africa equity analyst at Exotix Ltd., said by phone today. “It’s perfectly feasible” to reach the market-value target “and great news because it means the listing of NNPC with its approximately 1 million barrels a day oil production and reserves that go with it,” he said. All the cement companies, breweries and banks “of any significance” are already listed, said Hartland-Peel.

Demutualization Plan

The exchange of Africa’s most populous country has no time frame for its plans to demutualize and a committee focusing on the process is scheduled to start next month, Onyema said.

“We want to do it right, we don’t want to do it in a rush,” he said. “We want to make sure we take into consideration all the stakeholders and we address all the key questions that need to be addressed as part of the demutualization process.”

The Nigerian Stock Exchange All-Share Index fell for the second day, declining 0.6 percent to 25,023.84 by the 2:30 p.m. close in Lagos, according to an e-mailed statement from the bourse.

Onyema, who started work in April, replaced Emmanuel Ikazoboh who was appointed in August as interim administrator after the Securities and Exchange Commission removed former head Ndi Okereke-Onyiuke, as part of measures to address “inadequate oversight of the exchange,” it said.

Onyema joined the Nigerian bourse from the American Stock Exchange, where he was a senior vice president and chief administrative officer.

--With assistance from Vincent Nwanma in Lagos. Editors: Ana Monteiro, Linda Shen

To contact the reporters on this story: Chris Kay in London at ckay5@bloomberg.net; Oliver Joy in Moscow via London at ojoy@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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