Private Placement

[emmanuel ewumi]

With the pronouncement made yesterday by the Nigerian Stock Exchange
concerning private placement,do we think it will still be profitable to invest in private placements.Because private placements must now be listed at the issued price i.e. what it sold for during the placement.

[BLUEMONEY]

Originally Posted by emmanuel ewumi

With the pronouncement made yesterday by the Nigerian Stock Exchange
concerning private placement,do we think it will still be profitable to invest in private placements.Because private placements must now be listed at the issued price i.e. what it sold for during the placement.

I do believe if a PP is sold at a reasonable price (i.e CHEAP when compared with its fundamentals) then there is no cause for alarm when it is listed at the placement price.

[zainabusman]

Originally Posted by BLUEMONEY

I do believe if a PP is sold at a reasonable price (i.e CHEAP when compared with its fundamentals) then there is no cause for alarm when it is listed at the placement price.

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I agree. So lets beware of over priced PP's like ENCON.

[BLUEMONEY]

Originally Posted by zainabusman

.

I agree. So lets beware of over priced PP's like ENCON.

ENCON OR NEGRIS are not in my radial at all.

[zainabusman]

Originally Posted by BLUEMONEY

ENCON OR NEGRIS are not in my radial at all.

Spot on. And from ur posts, i know u dont think ENCON is fairly priced.

[realdeal]

What are your thoughts of PP like StarComms and Realtel? Worth buying?

[BLUEMONEY]

Originally Posted by realdeal

What are your thoughts of PP like StarComms and Realtel? Worth buying?

i thought the PP of these companies was over. from the little information i collected then, i did not find these PP interesting. and now that the secondary market is tempting, these guys are in thesame league with Negris or Encon or whatever they call themself.

[Shinee]

Originally Posted by emmanuel ewumi

With the pronouncement made yesterday by the Nigerian Stock Exchange
concerning private placement,do we think it will still be profitable to invest in private placements.Because private placements must now be listed at the issued price i.e. what it sold for during the placement.

I wonder how these NSE guys reasons. They are making thing worst with nobrainers rules. As long as there's no law to regulate PP, this type of rule will never work or help to minimize the numbers of firm coming up with PP. It can only encourage them on double take of PP & IPO. For example a firm that raised fund through unregistered PP at N2.00 per share a year ago and intend to list its share on NSE but want to raise fresh fund through IPO at N5.00 per share. How much will NSE expect such firm to be listed at???

If am not mistaking; SEC & NSE have no right over PP except IPO/PO. I stand to be corrected.

[XXCASH]

Originally Posted by Shinee

I wonder how these NSE guys reasons. They are making thing worst with nobrainers rules. As long as there's no law to regulate PP, this type of rule will never work or help to minimize the numbers of firm coming up with PP. It can only encourage them on double take of PP & IPO. For example a firm that raised fund through unregistered PP at N2.00 per share a year ago and intend to list its share on NSE but want to raise fresh fund through IPO at N5.00 per share. How much will NSE expect such firm to be listed at???

If am not mistaking; SEC & NSE have no right over PP except IPO/PO. I stand to be corrected.

Well you can raise funds through IPO unless you have been listed for atleast one year. So if your share price is worth N5.00 then i guess it would get there by then.

[Shinee]

Originally Posted by XXCASH

Well you can raise funds through IPO unless you have been listed for atleast one year. So if your share price is worth N5.00 then i guess it would get there by then.

What about DAAR Com that raised funds through IPO before listing?

[XXCASH]

Originally Posted by Shinee

What about DAAR Com that raised funds through IPO before listing?

See below. I have highlighted in bold answer to your question.


NSE introduces guidelines to check arbitrary price movement
Posted Monday, April 28, 2008

The Nigerian Stock Exchange has introduced a series of guidelines into capital market operations to prevent arbitrary share price movements of companies on the secondary market.

Announcing this to journalists in Lagos on Friday, the Director-General, NSE, Prof Ndi-Okereke Onyiuke, represented by her assistant, Mr. Lance Elakama, said that the new directive was aimed at ensuring that confidence in the market was promoted and that investors’ interests were fully protected

According to him, there would be a prohibition in price movements of shares of companies that do not have up to 100,000 units of shares in the market, compared with the 50,000 units of shares previously allowed by the exchange.

He said, “Henceforth, companies that do not have up to 100,000 units of shares in the market would be exempted from price movement, either upward or downward. This is against the 50,000 units that was obtainable in the past. The reason for this is because the shares, when not available in the market, would become scarce at certain point in time, causing the price to share price to rise unnecessarily. This has become very necessary to ensure that the interests of investors are protected.”

Recently, there has been calls by stakeholders in the capital market for the regulators to look into the situations of unrealistic upward movements in the prices of some companies’ shares.

The Securities and Exchange Commission has had to intervene by conducting investigations into the activities of the price movement of six companies recently, in a bid to correct the situation, thus suspending trading in two of the companies being investigated.

However, with this new directive, it would be expected that a lot of these occurrences would be checked, and the situation of unrealistic price movements would be curtailed.

It is also expected that the move would further enhance investors’ confidence in the market.

Elakama also announced that companies, which have been newly listed by introduction on the NSE, might not raise fresh funds through initial public offers until a year after the listing.

“Companies, which have been newly listed would not undertake any IPO for the purpose of raising fresh funds, until after the completion of one year or twelve months from the time of its listing. This would give the companies adequate time to effectively learn the ropes, and release their financial statements, to enable the public see their performance, before an IPO is undertaken.”

Elakama, said that three companies, whose names he did not disclose, were turned down on Thursday, when they sought for permission to undertake an IPO within a year of their listing. - Punch

[zainabusman]

Originally Posted by Shinee

What about DAAR Com that raised funds through IPO before listing?

I guess that was before they started enforcing the 1 year rule. However, note that, an IPO is under the NSE/SEC regulation. The IPO price will have to be agreed with them and if they suspect hanky panky they could insist on a lower price which could be close to the PP price. This could be especially true if the PP and IPO are not far apart.

The truth is most of the current PP's in the market are over priced considering the risk.

[XXCASH]

Originally Posted by Shinee

What about DAAR Com that raised funds through IPO before listing?

Point of correction, Daar didn't do an IPO. What they did was Offer for subscription and i think offer for sale.

Well i wasn't interested so i didn't pay attention then.

[hispy99]

Originally Posted by XXCASH

Point of correction, Daar didn't do an IPO. What they did was Offer for subscription and i think offer for sale.

Well i wasn't interested so i didn't pay attention then.

Daar did an IPO. Any company that issues stock to the public for the first time has done an IPO

[hispy99]

Originally Posted by BLUEMONEY

I do believe if a PP is sold at a reasonable price (i.e CHEAP when compared with its fundamentals) then there is no cause for alarm when it is listed at the placement price.

Unfortunately, this pronouncement is just hogwash in my opinion; it will not achieve anything. The underlying problem, "price manipulation" still remains. As long as only a few people can sell shares of newly listed companies, the brazen appreciation in price will go unchecked. Do we think that if Big Treat had been listed at PP price, anything would have been different? I beg to say NO.

Someone on Nairaland mentioned that one of the few major shareholders was not going to sell his Big Treat shares till the price reached N20. I believe the price was around N9 or N10 then. I did not believe the poster, now I know better.

[XXCASH]

Originally Posted by hispy99

Daar did an IPO. Any company that issues stock to the public for the first time has done an IPO

Are you sure. Well if they did i care less because i wasn't bothered about it.

I still don't think you are right about this IPO, what about the offer for sale. Would you call that an IPO