THE ALTERNATIVE SECURITIES MARKET - The Nigerian Stock ...

Click to edit Master title styleTHE ALTERNATIVE SECURITIES MARKETOF THE NIGERIAN STOCK EXCHANGEPresented byOscar OnyemaCEO, The Nigerian Stock ExchangeAT THELAUNCHING OF THE ALTERNATIVE SECURITIES MARKET FOR EMERGING BUSINESSThe Muson Centre, Onikan Lagos23rd April, 2013

Click to edit Master title style| Outline1234567• Definition of ASeM• Overview of SME Classification• Previous Support to SMEs• Key ASeM Initiatives• ASeM Today• Listing on ASeM• Overview of The Nigerian Stock Exchange

| Click Objective to edit Master title styleTo present the AlternativeSecurities Market (ASeM) ofthe Nigerian Stock Exchangeas the veritable platform foremerging businesses toaccess the capital market

Click to edit Master title styleDefinition of ASeM

Click to edit Master title styleOverview of SME Classification

| Click The Target to edit Market Master - title Classification style of SMEsSME definitions generally based on number of employees and turnover/value of assetsASIA EGYPT GHANA BRAZIL RUSSIA INDIA CHINA S/AFRICANo of EmployeesSmall 5 to 50 5 to 14 6 to 29 20 to 99 15 to 100 0

| Click The Target to edit Market Master - title Classification style of SMEsNigeria: Based on number of employees and assets valueCategoryNumber ofEmployeesAssets (NGN’ Million) US Dollar Equivalent(excluding land and buildings)(N159=1 UD$)1 Small Enterprises 10 - 49 10 - less than 100 $62,893 < $628,9312 Medium Enterprises 50 - 199 100 - less than 1,000 $628,931 < $6,289,308Source: 2012 Draft Revised MSME PolicyNSE Classification: Based on Market CapitalisationMedium CapSmall CapClassificationMarket Capitalisation> $150 million but < $1 billion< $150 millionSource: NSE Research22-Apr-13 The Nigerian Stock Exchange 8

Click to edit Master title stylePrevious Support to SMEs

| Click SME Historical edit Master Schemes title styleMoney Market• 1950s: Nigerian IndustrialDevelopment Bank• 1980s: Incentives to maximizeexploitation of naturalresources.• 1990s: SME developmentstrategies through NDE, PBNand SMEIS• 00s: CBN MSME developmentfundCapital Market• 1970s: Indigenization Decree(1972) & Nigeria EnterprisesPromotion Act (1977)• 1980s: Second Tier SecuritiesMarket (SSM)• 1990s: Renamed EmergingMarkets (no material change)• 00s: Attempted to create boardfor private placements ASEM/PRIPEX (idea was dropped)4/22/2013 The Nigerian Stock Exchange 10

| Click Diagnostics to edit of Master Previous title SME style BoardsDiagnostics• Culture of non-compliance• Unclear purpose and inferiorperception• Restriction on the amount ofcapital that could be raised• Below-average performance ofcompanies• Companies accessed onlyequity product from the market• No clear and specific rules togovern the boardIntervention• Introduction of DesignatedAdvisers to assist ASeMcompanies meet post-listingobligations• Clearly defined brand identityfor the board• Support to ASeM companiesthrough value added servicesand advocacy effort• Introduction of alternativecapital raising products• Creation of ASeM Rule Book4/22/2013 The Nigerian Stock Exchange 11

Click to edit Master title styleKey ASeM Initiatives

| Click Some to Key edit ASeM Master Initiatives title style - Completed• Developed brand essence towards launching of the board with identity,purpose and target company criteria• Reviewed listing requirements, making listing on ASeM readily accessibleand affordable to a wide range of viable emerging businesses• Introduced Designated Adviser (DA) Programme to support companies listedon ASeM in complying with post listing obligations and maintaining theirlisting status• Introduced ASeM Growth Ambassador (GA) Programme to project the ASeMbrand and support the advocacy and quotations drive of The Exchange• Introduced a bouquet of value added services, including InstitutionalServices, to assist listed companies to maximise benefit of their listingstatus4/22/2013 The Nigerian Stock Exchange 13

| Click Some to Key edit ASeM Master Initiatives title style - Ongoing• Developed Consequence Management Process for rule violation• Reviewing and currently enhancing market structure and trading mechanicsfor ASeM companies towards driving liquidity• Introducing ASeM Index to track performance of companies listed on theboard• Introducing alternative capital raising instruments, other than pure vanillaequity for ASeM companies to achieve optimal capital structure• Collaboration with organisations (SMEDAN, etc) towards developmentalprogrammes for ASeM companies• Involvement in the on-going MSME Policy Formulation to address capitalmarket provision for SMEs• Advocacy for affordable fee regime for ASeM companies by statutoryorganisations (CAC, FIRS, FRCN, etc)4/22/2013 The Nigerian Stock Exchange 14

Click to edit Master title styleASeM Today

| Click The Alternative to edit Master Securities title style Market (ASeM)• 11 Companies currently listed, spanning multiple sectors• Equity market capitalization of N4.10bn as at 19/04/13Services14%Construction/Real Estate1%ConsumerGoods6%Healthcare0%Industrial Goods5%NaturalResources0%Sectors• Financial Services• Utilities• Agriculture• ICT• Consumer goods• Services• ConglomeratesOil & Gas74%Sectors• Industrial goods• Oil & Gas• Construction/ RealEstate• Health Care• Natural Resources22-Apr-13 The Nigerian Stock Exchange 16

| Click Growth to edit Measure Master of title ASeM style Companies% Performance of ASeM Index2.001.71%1.501.000.500.00-0.50-1.00-1.50-1.62%-2.002012 (Full Year) 2013 (YTD)Figures as at Thursday April 18, 201322-Apr-13 The Nigerian Stock Exchange 17

| Click Introducing to edit the Master NSE title ASeM style Index• Market capitalization weighted index ofall companies listed on ASeM• 11 companies currently listed on theboard• Calculated on a daily basis• Full Year Return of -1.62% (2012)• YTD Return of 1.71% (Q1 2013)• Provides opportunity for creation ofproducts such as Exchange TradedFunds (ETFs), Options and Futures• Adjustments made for corporateactions, new listings, right issue andPlacing• Available on the NSE Daily Official Listand WebsiteCurrent Members of the Index:1. Adswitch Plc2. Afrik Pharmaceuticals Plc3. Anino International Plc4. Capital Oil Plc5. Juli Plc6. McNichols Consolidated Plc7. Rak Unity Petroleum Company Plc8. Rokana Industries Plc9. Smart Products Nigeria Plc10. Union Venture & Petroleum Plc11. West Africa Aluminium Products Plc22-Apr-13 The Nigerian Stock Exchange 18

| Click ASeM to – edit Pillars Master title styleASeMDesignated Advisers (DAs) Growth Ambassadors (GAs) Institutional ServicesThe DA Programme wasintroduced for securitiesprofessionals to helpcompanies comply with anddischarge theirresponsibilities under thelisting rules of ASeM and toensure that companiesbenefit from and maintaintheir listing status, byproviding professional andimpartial guide.A list of accredited DAs isavailable on the NSE website.The ASeM GA Programmewas introduced to project theASeM brand and support theadvocacy and quotationsdrive of The Exchange.GAs will be accomplishedindividuals who arecommitted to developingentrepreneurship in Nigeria.GAs will support, endorseand promote growth ofemerging businesses inNigeria on ASeM.Institutional Services is avalue add of The NSE aimedat aiding emergingbusinesses in the design anddocumentation ofappropriate internal businessstructures, managementprocesses and procedures toposition them as world-classenterprises.The NSE is in partnershipwith service providers todeliver this service atrelatively lower cost22-Apr-13 The Nigerian Stock Exchange 19

Click to edit Master title styleListing on ASeM

| Click ASeM to – edit Benefits Master of Listing title styleAccess to long termcapital for growthand expansionPlatform forfacilitating long termsustainability of thecompanyReduction of financialburden and riskspreading amongstshareholdersMembership of a globalplatform that affordsbrand visibility andcredibilityenhancementAccess to investorsfocused on highgrowth potentialSMEs in emergingmarketsProfessional guidance(Designated Adviser)to ensure companybenefits from andmaintains its listingstatusOpportunity forinitial investors torealise some or allof their investmentLiquidity forshareholders andtransparent pricediscovery mechanismCapacity buildingthrough access to abouquet ofdiscounted valueadded services22-Apr-13 The Nigerian Stock Exchange 21

| Click ASeM to – edit Listing Master Requirements title styleSubject ASeM Previous ASeM NewPre Tax Profits NA Medium term (at least 2 years)comprehensive business planMarket Cap NA NAOperating RecordFinancialsThe company must submit financialstatements/business records for the 3years priorThe date of the company’s last auditedaccounts must not exceed 9 months.2 yearsDate of last audited accounts must not bemore than 9 monthsPublic FloatThere is are no restrictions (minimum) onthe amount of share capital that must beoffered to the public.Public Shareholders There are no restrictions on the number ofshareholdersMinimum of 15% of share capital must beoffered to the publicat least 51 shareholdersContinuingObligationsAfter listing, the company must submithalf-yearly and annual accounts (financialstatements).Securities must be fully paid up at the timeof allotment and un-allotted securitiesmust be sold on the trading floorPromoters to retain 50% of shares held atIPO for first 12 months. Submission ofquarterly, semi – annual and annualstatements. Companies must retain aDesignated Adviser to assist withregulatory compliance22-Apr-13 The Nigerian Stock Exchange 22

| Click ASeM to – edit Routes Master to Listing title styleInitial PublicOffering (IPO)By Way OfIntroductionA company offersshares to the publicfor the first time.Money paid byinvestors for thenewly issued sharesgoes directly to thecompany to providecapital for futuregrowth, or torefinance debt.A company’sshares are"introduced" to themarket with a preagreedinsider salefor public float,having compliedwith theExchange’s ListingRequirements.*A company may include an offer for sale element in its IPO, where funds will go todivesting shareholders – this helps to increase the public float.22-Apr-13 The Nigerian Stock Exchange 23

| Click First Steps to edit Toward Master Listing title style on ASeMHold a board meeting andpass a Board Resolutionto list. Call an EGM/AGMto obtain shareholdersapproval through aShareholders’ ResolutionInitial Public Offer?Determine amount ofcapital to be raised withFinancial Adviser. IncreaseAuthorised Share Capitalif necessary.Initiate the conversionof Accounts toInternational FinancialReporting Standard(IFRS)File with the CorporateAffairs Commission (CAC)to convert from a LimitedLiability Company (Ltd) toa Public Limited LiabilityCompany (Plc)LtdPlcListing by Introduction?Increase number ofshareholders to Boardminimum (300 – MB,51-ASeM)Appoint a DesignatedAdviser to commence theprocess of listing on thefloor of The Exchange(Visit NSE website)4/22/2013 The Nigerian Stock Exchange 24

Click to edit Master title styleOverview of The Nigerian Stock Exchange

| Click About to The edit Nigerian Master title Stock style Exchange2 nd Largest Exchange in Africa by Market CapApprox. 5 million investors: Foreign (40.3% ofmarket activity); Local investors (59.7% ofmarket activity)238 Active dealing member firms;48 Dealing members/Issuing Houses20 Ordinary members/Issuing Houses44 Non-members/issuing HousesEquity and bond products: 200 listed equitieswith N10.55t in market cap (193 operatingcompanies); 56 bonds (N4.08t in FGN bonds,N391b in State bonds and N1.40t in Corp.bonds) 1 ETF (N872.8m)Founded in 196014 electronic trading floors aroundNigeriaFigures as at Friday April 19 201322-Apr-13 The Nigerian Stock Exchange 26

| Click The NSE to edit Vision Master title style4/22/2013 27

| Click NSE Pillars to edit Master title styleTargetedBusinessDevelopmentEffortsStrongRegulatoryEnvironment“21 st ”CenturyTechnologyStrategiesGrowth-EnablingMarketStructureFirst-RateInvestorProtectionPrograms$1tMarketCapTarget4/22/2013 28

| Click Market to edit Snapshot Master title styleNSE All Share Index32,993.97Equity MarketCapitalizationN10.55tn201317.50%(YTD)17.56%(YTD)Total MarketCapitalizationFixed IncomeMarket cap:N5.89tn193 listedcompaniesTwo key indicesAll Share Index(NSE ASI)NSE 30 Index(NGSE30:IND)Equity ProductsMarket capN10.55tn.N16.44tn [ 10.73% YTD]Statistics as at April 19, 201322-Apr-13 The Nigerian Stock Exchange 29

| Click Key 2013 to edit Initiatives Master title stylePILLARS FOR GROWTHKEY INITIATIVESNSE PILLARS SHORT-TERM (2013)1. Targeted Business Development Efforts • ASeM Launch1. Targeted Business Development Efforts ASeM Re-Launch• Derivatives Feasibility StudyDerivatives Feasibility Study• Product Innovation Innovation (e.g. (e.g. ETFs, Retail NDRs) Bonds, ETFs, NDRs)2. Strong Regulatory Environment • Enhanced Rulebook2. Strong Regulatory Environment Enhanced Rulebook• Issuer’sIssuer’s PortalPortal• Improved Cooperation with with Other Other Exchanges Exchanges and Global andGlobal Organizations Organizations• Whistle Blowing Programme3.3.21st21st CenturyCenturyTechnologiesTechnologiesStrategiesStrategies • DeliveryDelivery ofofNewNewTradingTradingPlatformPlatform• Automation of of Transaction Transaction Lifecycle Lifecycle4. 4. Growth-Enabling Growth-Enabling Market Market Structure Structure • Transaction Transaction Cost Cost Analysis Analysis• Market Optimization5. 5. First-Rate First-Rate Investor Investor Protection Protection Programs Programs • Financial Financial Literacy Literacy Programme Programme• Operation of of Investor Protection Protection Fund Fund6. 6. Market Market Development Development and and Improved Improved Operational Operational Efficiency • Policy Policy Advocacy AdvocacyEfficiency• Corporate Social Responsibility (CSR) (CSR) Programme Programme• DemutualizationDone On-going Not started4/22/2013 The Nigerian Stock Exchange 30

| Click How we to edit can Master help title styleThe Nigerian Stock Exchange has a dedicated BusinessDevelopment Division, focused on Listings Sales; Retention(Relationship Management); and Product Management/Development.The team is available to guide companies through the entire listing process.4/22/2013 The Nigerian Stock Exchange 31

Click to edit Master title styleThank YouStock Exchange House2 - 4 Customs StreetP.O. Box 2457, MarinaLagos Island, Lagos, Nigerialistingsales@nse.com.ngwww.nse.com.ng