NASD: N12bn Rights Issue Nigeria Secures Capital for Exchange Transition

• NASD Plc has launched a rights issue to raise N12 billion by offering 480 million new shares at N25 each to existing shareholders.
• The capital raise aims to strengthen NASD's equity base, meet regulatory capital requirements, and fund its transition to a composite exchange.
• Net proceeds of N11.72 billion, after expenses, will be primarily allocated to strategic portfolio investments, working capital, and technological upgrades.
• Upon full subscription, NASD's issued share capital will expand to 1.08 billion shares, with a post-issue market capitalization of N27 billion.
• Anchoria Capital Group is the Lead Issuing House, with other firms serving as Joint Issuing Houses, awaiting SEC clearance for the offer to open.

This capital gives NASD greater capacity to invest in the infrastructure, technology and talent required to deepen market participation, develop new markets and make NASD a stronger platform for capital formation.

NASD Plc, the Nigerian over-the-counter (OTC) securities exchange, has initiated a significant capital raising exercise through a rights issue, aiming to secure N12 billion. This NASD Plc capital raising initiative is designed to bolster the exchange's equity base, meet evolving regulatory capital requirements, and facilitate its strategic transformation into a composite exchange structure. Under the terms of this Nigerian OTC exchange rights offer, NASD is making available 480 million new ordinary shares, each with a nominal value of N1, to its existing shareholders at an offer price of N25 per share. Eligible shareholders, as determined by a qualification date, are entitled to subscribe for four new ordinary shares for every five existing shares they currently hold.

Assuming full subscription from eligible investors, the exercise is projected to yield net proceeds of N11.72 billion. This figure accounts for estimated issue expenses totaling N275.88 million. The successful completion of this NASD N12bn Rights Issue Nigeria will significantly expand NASD's issued share capital from its current 600 million ordinary shares to 1.08 billion ordinary shares, consequently elevating the institution's post-issue market capitalization to N27 billion based on the N25 offer price.

This substantial capital injection is not merely about meeting financial benchmarks; it represents a pivotal step in NASD's strategic evolution. Kenechi Ezezika, Chairman of NASD, emphasized that the capital boost marks a decisive move to enhance operational capacity within Nigeria's domestic capital ecosystem. He highlighted that the transaction is crucial for building the necessary capacity for NASD's next phase of growth, acknowledging the rapid evolution of capital markets and the increasing demand from issuers and investors for efficient, transparent, and technologically advanced platforms. The recapitalization, according to Ezezika, will empower NASD to effectively capitalize on these emerging opportunities.

Arese Ugwu, the Acting Managing Director and Chief Executive Officer, further elaborated on the strategic imperative, stating that the offer extends beyond mere regulatory compliance. She underscored that the NASD composite exchange transition is about constructing the institution required for the market NASD aspires to create. Ugwu noted Nigeria's abundance of ambitious businesses and capital, identifying the opportunity to forge stronger, more efficient markets that connect these two elements. This capital gives NASD greater capacity to invest in the infrastructure, technology and talent required to deepen market participation, develop new markets and make NASD a stronger platform for capital formation. This move is also directly linked to satisfying SEC Nigeria NASD regulatory capital requirements, ensuring the exchange remains compliant while pursuing its ambitious growth agenda. The transition to a composite exchange framework is expected to broaden the institution's scope, offering more versatile financing avenues for a wider spectrum of corporate issuers and investors.

The offer prospectus provides a detailed breakdown of how the net proceeds will be deployed. A significant portion, N8.17 billion, representing 68.12 percent of the net funds, is earmarked for strategic portfolio investments aimed at supporting future market-development initiatives. Additionally, N3.25 billion, or 27.08 percent of the net proceeds, will be allocated as working capital over an 18-month period to support day-to-day operations and growth. A further N300 million, constituting 2.50 percent, is designated for investment in cloud trading systems and technological support over the next 12 months, reflecting a commitment to modernizing the exchange's infrastructure.

The administration of this significant capital raise involves several key financial institutions. Anchoria Capital NASD Group, serving as the Lead Issuing House, through its Group Managing Director, Sam Chidoka, has assured stakeholders of collaborative efforts among transaction advisers to ensure seamless offer administration and robust shareholder participation. Damilola Titiladunola, Managing Director of Anchoria Advisory, confirmed that the acceptance list for the offer is set to open shortly, pending formal regulatory clearance from the Securities and Exchange Commission. Supporting Anchoria Capital Group as Joint Issuing Houses for the transaction are Greenwich Capital Markets Limited, Capital Bancorp Plc, and Capital Assets Limited, collectively working to facilitate the successful execution of the rights issue.

Lawyers advising existing NASD shareholders should note the N12bn rights issue terms and upcoming deadlines to inform client decisions. This capital raise also signals NASD's strategic expansion into a composite exchange, which could broaden financing avenues and alter market dynamics for corporate issuers and investors in Nigeria.

Source: Original reporting via Nigerian financial news.