September 21, 2023

Delisting of GSK, PZ, others to wipe N205bn from stock market cap

RoI: NGX tasks investors on portfolio diversification

By Nkiruka Nnorom

About N205.002 billion will be wiped from the Nigerian Exchange Limited (NGX) equities capitalization following the planned delisting of GlaxoSmithKline (GSK) Plc, PZ Cusson Plc, Oando Plc, Coronation Insurance Plc, and Capital Hotel Plc, from the stock market.

The proposed delisting of the companies comes barely two months after the delisting of Ardova Plc’s 1.31 billion shares on July 26, 2023. Ardova Plc had N21.49 billion market capitalization as at the time of its delisting.

Vanguard findings show that the eventual delisting of GSK, which announced its intention to shut down its operation in Nigeria, will cost the market N15.49 billion in market value.

GSK, had early last month, announced plans to cease operations in Nigeria without stating reasons for its decision. The company had, in the regulatory filing to announce the planned exit, said that it plans to cease operation after evaluating the options for moving to a third party distribution model for its pharmaceutical products.

Economy experts have, however, linked the company’s decision to scarcity of foreign exchange (Forex) and the forex losses incurred by most companies following the devaluation of the Naira.

In its H1’23 report, the company lamented that the business environment continued to be very challenging with forex availability affecting its ability to settle foreign currency-denominated trade payables with product suppliers.

“As a result, it remained difficult to maintain consistent supply to the market,” GSK Nigeria added.

PZ Cusson, which announced plans to buy out the minority shareholders, penultimate week, has N79.41 billion in market capitalisation.

PZ Cusson Group had stated in the notice filed with the NGX that  the planned buy-out, which will culminate in delisting, would enable it to significantly simplify and strengthen operations in Nigeria creating the foundations for the Nigerian business to deliver against its strategy, building a more agile and innovative business.

Oando Plc has N87.02 billion in market value. The company’s decision to delist is a culmination of several legal battles over the years which pitched the company’s management against some of its minority shareholders over ownership interest.

Coronation Insurance, also in line for an exit from local bourse, has N14.4 billion in market capitalisation, while Capital Hotel Plc has N8.692 billion in market value.

Coronation Insurance opted to leave the NGX after it received an offer from Coronation Capital (Mauritius) to acquire shares of the company at 65 kobo and subsequently delist from the NGX.

On the other hand, Capital Hotel said its plan to delist is to enable it “explore strategic opportunities, alliances, and collaborations that can bolster earnings and/or provide synergized benefits with little or no regulatory obligations.”