Great Nigeria Insurance (GNI) Plc is pushing to be delisted from the Nigerian Stock Exchange (NSE) mainly because majority core investors are unwilling to dilute their shareholdings to free up more shares for minority retail investors.
GNI Shareholders are scheduled to meet today in Lagos at an extraordinary general meeting to consider a proposal by the board of directors for the delisting of the insurance company from the NSE.
In a statement on the proposed delisting, the board of the company noted that GNI’s free float currently stands at 16.03 percent, significantly below the NSE’s minimum free float of 20 percent for the company listed on the main board of the Exchange.
While the Quotations Committee of the National Council of the Exchange has extended the timeline for GNI to free up more shares to May 2020, the company stated that it may not be able to improve its free float within the period.
“We do not expect that this deficiency will be cured during that period and we expect the NSE to initiate a regulatory delisting,” GNI stated.
According to the board, through the voluntary delisting of GNI, the company will be exercising a regulatory provision that will shield it from any enforcement action that the Exchange may effect, which may arise as a result of the outstanding free float deficiency.
The board also noted that over the last five years, there has been little or no trading activity on the shares held by the minority shareholders, pointing out that there has also been a considerable fall in trading volumes over the last 12 months with an average daily volume of about 1,200 shares between March 2017 and last March.
The board argued that shareholders were not benefiting from the continued listing as shareholders were not getting any exit opportunity and their investments have been locked up and they found it difficult to dispose of their shareholding.
The board added that the company has neither benefitted from the continuing listing as its shares continue to trade at a significant discount to the intrinsic value.
“Furthermore, through the voluntary delisting process, the company will be providing an exit consideration to minority shareholders who do not wish to remain in an unlisted company,” GNI stated.
The board of directors said the delisting will afford the company opportunity to further an imminent corporate restructuring exercise to take advantage of emerging opportunities, noting that the company may consider re-listing on the Exchange in the future if the market conditions are favorable.
According to the company, the voluntary delisting will not occasion the loss of business opportunities as there are similar unlisted insurance companies who are commanding the significant share of the insurance market. Also, minority shareholders will not lose their shares because of the voluntary delisting and such shareholders may retain their membership in the unlisted company. However, through the voluntary delisting process, the minority shareholders – who do not wish to be members of an unlisted company – will have an opportunity to exit the company.
As part of the delisting plan, Insurance Resourcery and Consultancy Services Limited (IRCSL), which owns majority equity stake in the company, has expressed willingness to pay a cash consideration of 50 kobo per share for every share surrendered by minority shareholders. The exit price of 50 kobo is based on the highest price of 50 at which GNI has traded in the last six months.
“Shareholders that intend to a member of an unlisted GNI Plc shall be free to remain and there is no obligation to receive the exit consideration,” the board stated.
Credits: The Nation Online Nigeria