The End of the IPO as we Know It - OpEd

Proshare

Wednesday, April 01, 2020   / 01:47PM / By Mike Hofman with notes from Rick Turoczy & Proshare Research / Header Image Credit: James Clapham/AL

 

Highlights

  • Founders, companies, and investors are rebelling against the investment banks - and taking matters into their own hands.
  • The US IPO Market: "All told, the 159 companies that went public in the U.S. in 2019 raised $33 billion, according to PitchBook, down nearly 30% from 2018."
  • This story is part of The New Rules of the IPO, a multi-part special report.
  • Additional Data on the Nigerian bourse provided for context

 

2019 was a terrific year for the stock market. The Dow Jones Industrial Average rose by more than 22% and the S&P 500 went up nearly 29%. But even as a broad range of businesses fared well in 2019, the market for private companies going public proved to be punishing, particularly for the best-known startups.

 

Some of the most highly anticipated IPOs failed to live up to their expectations, including tech darlings like Lyft and Uber. In total, the 159 companies that went public last year raised $33 billion, a figure down nearly 30% from 2018.

 

A growing number of entrepreneurs and venture capitalists are now deciding whether or not there's something wrong with the IPO market, given that these IPOs are proving to be more and more inhospitable. These IPO skeptics are now looking to popularize an alternative avenue for taking companies public via direct listings, which consists of selling existing shares rather than issuing new ones.

 

Read the full story here

 

Though the Renaissance IPO Index ended the year up 35%, beating the broader market, investors, underwriters, and entrepreneurs are left feeling walloped. That's because a number of headline-grabbing misfires dampened enthusiasm for initial public offerings of stock. WeWork's yanked IPO was the most high-profile example of trouble, but there are others. Endeavor, the sports, fashion, and talent conglomerate once valued at $7.8 billion, pulled its planned IPO due to a lack of support, as did Postmates, the delivery service, which is now said to be seeking a buyer.

 

Meanwhile, the companies that did make it out found the public-market terrain to be fairly brutal. Once-celebrated unicorns such as UberLyftPeloton, and Pinterest went public only to struggle to generate investor enthusiasm. And B2B player Zoom, the videoconferencing software company, which had a juicy pop of 72% on its first day of trading, has seen its fortunes seesaw, falling from a high of $102 to roughly $88 at press time, even as the broader market, especially the tech sector, has been on a tear. Even Saudi Aramco, the oil-and-gas colossus that went public in Riyadh on December 11 and instantly became the world's most valuable company, is said to have fallen short of the Saudis' expectations that it should be valued at $2 trillion.

 

"It is unusual to have a year when the stock market did so well overall, while the market for private companies going public proved to be punishing, particularly for the best-known startups."

 

All told, the 159 companies that went public in the U.S. in 2019 raised $33 billion, according to PitchBook, down nearly 30% from 2018.

 

And more recently, unicorn mattress-maker Casper, which had its IPO in February, ended up slashing its offering price before going public with a market cap of less than $500 million, well below its $1.1 billion pre-IPO valuation.

 

How is it that the hottest growth companies have stumbled out of the gate? The IPO market is notoriously mercurial, of course, and often performs differently from the market as a whole. Still, it is unusual to have a year when the stock market did so well overall, while the market for private companies going public proved to be punishing, particularly for the best-known startups.

 

Read the full story here

 

About the Author

Mike Hofman is a writer and editor living in New York. His work has appeared in Fortune, GQ, and Inc. Summary was provided via Angel.co by Rick Turoczy, Founder/General Manager at PIE .

 

Proshare Nigeria Pvt. Ltd.

 

The Nigerian Scene

 

Listings By Introduction and IPO - Historical Data

 

Listing by introduction provides a route for a company that has to apply for listing on the bourse of the NSE, by placing its existing shares in the cleared-for-trading portal of the exchange. Entities are required and expected to meet the minimum listing requirements as set out in the rule book and "guidance for listing"  documentation, which includes the minimum free float that affirms the listing.

 

This mode of listing has been embraced in recent times by entities that have approached the market regulator(s) for listing; in a market that has witnessed far less primary market activities (IPO listings) due to a myriad of reasons.

 

The market has, so far, witnessed no IPO in year 2020 and 2019 while just one (1) IPO was witnessed all through the year 2018.

 

In total, only four (4) entities have been listed via IPO in the last eleven (11) years; all four (4) companies recorded negative returns as HONYFLOUR recorded the highest negative return with -88.47% decline recorded while SEPLAT recorded the least decline with -6.92% decline recorded. No positive traction has been achieved via IPO listing over an eleven (11) year period.

 

Table 1: Entities Listed by IPO on the NSE In the Last 11 Years

 Proshare Nigeria Pvt. Ltd.


In the last eleven (11) years, eighteen (18) entities have taken advantage of the listing by introduction route, the latest being BUA Cement Plc.

 

Table 2: Entities Listed by Introduction on the NSE In The Last 11 Years

 Proshare Nigeria Pvt. Ltd.


A review of the performance of the eighteen (18) companies listed in the last eleven (11) years reflected that 11% or two (2) of such companies recorded positive returns, 72% or thirteen (13) of such companies recorded negative returns while three (3) of such companies which were listed in 2019, 2018 and 2014 respectively remained flat (No Change in Price) at their listing prices as at March 31, 2020.

 

MEDVIEWAIR recorded the highest positive return of +8.00%, while AFRINSURE recorded the highest negative return of -94.55%DANGCEM, the most capitalised listed stock as at March 31, 2020 has so far recorded -3.93% negative returns to date.

 

Compan(ies) Delisted

 The Nigerian Equities Market has recorded eighty-seven (87) delistings between 2009 and January 9th, 2020. Seventy-two (72) were regulatory delisting while fifteen (15) were voluntary delistings

SN

Company

Date Delisted

Reason

1

FOOTWEAR MANUFACTURING PLC

2009

Regulatory: NSE

2

FERDINAND OIL MILLS PLC

2009

Regulatory: NSE

3

CHRISTLIEB PLC

2009

Regulatory: NSE

4

BCN PLC

2009

Regulatory: NSE

5

LIZ-OLOFIN & COMPANY PLC

2009

Regulatory: NSE

6

OLUWA GLASS COMPANY PLC

2009

Regulatory: NSE

7

ASABA TEXTILE MILLS PLC

2009

Regulatory: NSE

8

ABOSELDEHYDE LABORATORIES PLC

2009

Regulatory: NSE

9

EPIC DYNAMIC PLC

2009

Regulatory: NSE

10

FAMAD PLC

2009

Regulatory: NSE

11

ABA TEXTILE MILLS PLC

2009

Regulatory: NSE

12

AFPRINT PLC

2010

Regulatory: NSE

13

INCAR PLC

2010

Voluntary

14

NIGERCEM PLC

2011

Regulatory: NSE

15

DAILY TIMES OF NIGERIA PLC

2011

Regulatory: NSE

16

ALBARKA AIRLINE PLC

2011

Regulatory: NSE

17

FOREMOST DAIRIES PLC

2011

Regulatory: NSE

18

WIGGINS TEAPE NIGERIA PLC

2011

Regulatory: NSE

19

OKITIPUPA OIL PALM PLC

2011

Regulatory: NSE

20

FIRST CAPITAL INVESTMENT & TRUST PLC

2011

Regulatory: NSE

21

FLEXIBLE PACKAGING PLC

2011

Regulatory: NSE

22

NEWPAK PLC

2011

Regulatory: NSE

23

KRABO NIGERIA PLC

2011

Regulatory: NSE

24

TROPICAL PETROLEUM PLC

2011

Regulatory: NSE

25

NAMPAK PLC

2011

Voluntary

26

UNITED NIGERIA TEXTILE PLC

2011

Voluntary

27

NIGERIAN BOTTLING COMPANY PLC

2011

Voluntary

28

BANK PHB PLC

2011

Nationalised: CBN

29

AFRIBANK PLC

2011

Nationalised: CBN

30

SPRING BANK PLC

2011

Nationalised: CBN

31

INTERCONTINENTAL BANK PLC

2011

Merged with Access Bank Plc.

32

OCEANIC BANK PLC

2011

Merged with ETI

33

FINBANK PLC

2011

Merged with FCMB Plc

34

ECOBANK NIGERIA PLC

2011

Absorbed by ETI: Now Ecobank Nigeria Ltd

35

CONFIDENCE INSURANCE PLC

2012

Licence Withdrawn

36

ABPLAST PLC

2012

Regulatory: NSE

37

UDEOFSIN GARMENT PLC

2012

Regulatory: NSE

38

HALLMARK PAPER PRODUCT PLC

2012

Regulatory: NSE

39

NIGERIAN BAG MANUFACTURING COMPANY PLC

11-Apr-13

Merged with Flour Mills Plc

40

CRUSADER INSURANCE NIGERIA PLC

13-May-13

Merged with Custodian & Allied Insurance Plc

41

WEST AFRICAN ALUMINIUM PLC

03-Jun-13

Regulatory: NSE

42

NIGERIAN WIRE INDUSTRIES PLC

03-Jun-13

Regulatory: NSE

43

BIG TREAT PLC

24-Nov-14

Regulatory

44

AFROIL PLC

24-Nov-14

Regulatory

45

STARCOMMS PLC

24-Nov-14

Regulatory

46

PINNACLE POINT GROUP

24-Nov-14

Regulatory

47

POLY PRODUCTS PLC

12-Dec-14

Voluntary

48

OASIS INSURANCE PLC

31-Dec-14

Acquired by FBN Life Insurance

49

CAPPA AND D'ALBERTO PLC

16-Jan-15

Voluntary

50

IHS NIGERIA PLC

06-May-15

Voluntary

51

NIGERIAN SEWING MACHINE MANUFACTURING PLC

13-Jul-15

Regulatory: NSE

52

STOCKVIS PLC

13-Jul-15

Regulatory: NSE

53

NIGERIA WIRE & CABLE PLC

13-Jul-15

Regulatory: NSE

54

IPWA PLC

18-May-16

Regulatory: NSE

55

G. CAPPA PLC

18-May-16

Regulatory: NSE

56

WEST AFRICAN GLASS INDUSTRIES PLC

18-May-16

Regulatory: NSE

57

INVESTMENT & ALLIED INSURANCE PLC

18-May-16

Regulatory: NSE

58

ALUMACO PLC

18-May-16

Regulatory: NSE

59

JOS INTERNATIONAL BREWERIES PLC

18-May-16

Regulatory: NSE

60

ADSWITCH PLC

18-May-16

Regulatory: NSE

61

ROKANNA PLC

18-May-16

Regulatory: NSE

62

VONO PRODUCTS NIGERIA PLC

23-May-16

Merged with Vitafoam Plc

63

LENNARDS (NIGERIA) PLC

01-Dec-16

Regulatory: NSE

64

P.S MANDRIDES & COMPANY PLC

01-Dec-16

Regulatory: NSE

65

PREMIER BREWERIES PLC

01-Dec-16

Regulatory: NSE

66

COSTAIN (W.A) PLC

01-Dec-16

Regulatory: NSE

67

NAVITUS ENERGY PLC

01-Dec-16

Regulatory: NSE

68

NIGERIAN ROPES PLC

01-Dec-16

Regulatory: NSE

69

BECO PETROLEUM PRODUCTS PLC

02-May-17

Regulatory: NSE

70

MTECH COMMUNICATIONS PLC

02-May-17

Regulatory: NSE

71

MTI PLC

02-May-17

Regulatory: NSE

72

UTC PLC

02-May-17

Regulatory: NSE

73

ASHAKACEM PLC

04-Jul-17

Merger with Lafarge Africa Plc

74

AVON CROWN CAPS AND CONTAINERS PLC

18-Sep-17

Voluntary  

75

SEVEN-UP BOTTLING COMPANY PLC

05-Mar-18

Voluntary

76

AFRICAN PAINTS (NIGERIA) PLC

06-Apr-18

Regulatory: NSE

77

AFRIK PHARMACEUTICALS PLC

06-Apr-18

Regulatory: NSE

78

PAINTS AND COATINGS MANUFACTURERS NIGERIA PLC

17-Aug-18

Voluntary 

79

GREAT NIGERIA INSURANCE PLC

25-Jan-19

Voluntary

80

DIAMOND BANK PLC

01-Apr-19

Merged with Access Bank Plc

81

NEWREST ASL NIGERIA PLC

13-May-19

Voluntary

82

FIRST ALUMINIUM NIGERIA PLC

31-Jul-19

Voluntary

83

Skye Bank Plc

21-Aug-19

Regulatory: NSE

84

Fortis Microfinance Bank Plc

21-Aug-19

Regulatory: NSE

85

DANGOTE FLOUR MILLS PLC

​18-Nov-2019

Voluntary

86

A.G. LEVENTIS (NIGERIA) PLC

7-Jan-2020

Voluntary

87

CEMENT COMPANY OF NORTHERN NIGERIA PLC

9-Jan-2020

Merged with BUA Cement Plc (formerly OBU Cement Company Plc)

Source: Proshare Research, NSE as at Mar 31st, 2020

 

Proshare Nigeria Pvt. Ltd. 

 

Credits

The post The end of the IPO as we know it first appeared in Marker, Medium  on Tuesday, February 18, 2020. This story is part of The New Rules of the IPO, a multi-part special report.

 

The extended contribution on Nigeria was provided by Proshare Research to enrich and provide a local perspective.  

 
Proshare Nigeria Pvt. Ltd.

 

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