Issuing Houses Decry Dichotomy of Roles
By Uche Obike and Tunyosola Ayansiji
The Association of Issuing Houses of Nigeria (AIHN) has frowned at the separation of roles between financial advisers and issuing houses in the nation's capital market.
Speaking recently in Lagos at the Association's quarterly Ordinary General Meeting, the Chairman, Mr. Albert Egba Okumagba, called on the authorities concerned to address the issue of dichotomy or separation of roles between financial advisers and issuing houses. Okumagba explained that "in a free market society, I don't think that is the way to go about it. If issuers decide to separate the role of financial adviser in an issuing house, I think the Exchange should respect the decision of the issuing houses without grudge.
"For those who have played the role of either financial adviser or issuing house or joint role of financial adviser and the issuing house there are different values of proposition and the different option is predictable and I think the Stock Exchange should allow the issuers to overtime benefit from the different options to make up their minds as to the structure that is most convenient for accessing capital."
He decried the prevailing situation where financial advisers are being denied the opportunity of having their names reflected in Offer document.
In addition, Okumagba alleged that financial advisers were also being denied access to present issues jointly to the quotation committee.
He recalled that "we were involved in the recent Standard Trust Bank's Initial Public Offer (IPO) where we played the role of financial adviser for about 15 Months. We advised Standard Trust Bank on strategies for accessing the market and for about nine months, after the board took the decision and parties were appointed, we guided them in all the things they did. We also guided them in determining the kind of practise to be adopted. But, when it came to accessing the NSE, we were denied access to the quotation committee and the document."
He advised that "if the issuer insist that it must have a financial adviser and must separate those roles, I think the stock exchange should do a thorough analysis of the situation and also check what happens in other jurisdictions and come up with a clear position as to how to handle this matter. The time it takes to put together an Offer is too long. We have to build an underwriting capacity so that issues will take a shorter time to conclude and issuers can have access to their funding in due time."
He also frowned at the current situation where some quoted companies are placed on technical suspension from three to six months. According to Okumagba, technical suspension has major implications for returns on investment because the prices do not move up and down over that period. He said that companies should be allowed to face the market based on perception and fundamentals of the firms.
Okumagba commended participants at the meeting, saying that the consistent sharing of knowledge with key stakeholders in different industries would enhance the operators' investment horizon and help them to evolve products of high economic value to investors. "Such development would help us to build a virile and dynamic capital market needed for future economic development," he added.
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