Recapitalisation fever hits capital market
April 26th, 2007 Ogbuotobo Chuks || chuks@stockmarketnigeria.com
By Ogbuotobo Chuks
After cutting through some sectors of the economy, the recapitalisation reforms has finally hit Nigerian capital market operators.
This development was announced recently by the Nigerian Minister of Finance, Mrs. Usman Nenadi.She also announced a reduction in the transaction costs in the capital market by about 40 percent.
The recapitalisation exercise which is to take immediate effect and be concluded by December 31, 2008 has the following terms-minimum pai up capital for issuing houses from N150 million to N2 billion, brokers-dealers from N70 million to N1 billion, clearing and settlement agencies from N500 million to N1 billion and registrars from N50 million to N500 million.
Also, the transaction costs on equities in the primary market, which curently stands at 6.92 percent, has been cut down to 4.32 percent, while that for bonds has been reduced from 7.03 percent to 4.79 percent. Similarly, transaction costs in the secondary market has been reduced , as cost on the buy side has been reduced from 4.07 percent to 2.36 percent, while commission on sales fell from 4.12 percent to 2.65 percent.
Underwriting of all public offers has been made mandatory to as much as 80 percent. This is to reduce any occurence of undersubscription in the market.
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