- ‘Companies have failed to list shares on NSE, 12 years on’
- Give us more time, affected firms plead
Some Nigerians that invested in the private placement offer of Industrial General Insurance Plc, Trust Bond Homes, Acorn Petroleum, and Lagos Building Investment Limited between 2006 and 2007 have called on the Securities and Exchange Commission to probe the outfits’ managements.
The investors are bitter over the failure of the managements of the firms to pay dividend and list shares on the floor of the Nigerian Stock Exchange as promised during the private placement offer, which was allegedly laced with infractions.
This call is coming 12 years after the companies promised and failed to list the shares on the Exchange and pay dividend to the investors.
According to the investors, a wise move would be to probe the managements and report them to the Economic and Financial Crimes Commission before they totally lose their stakes in the companies.
Private Placement is an attractive alternative source of raising fund from private investors in the form of stocks and sometimes bonds. In both Nigeria and United States of America, the offer often does not need to be registered with SEC.
Findings revealed that over 400 organisations across several sectors of the economy raised funds through the private placement offer between 2006 and 2009.
They include Industrial and General Insurance, which raised N5.80 billion in July 2006; Intercontinental Homes, now Trust Bond (N1.50 billion); Acorn petrol (N280,000) and LBIC (N1.8 billion in October 2007).
Others are Jubilee-Life Savings and Loans, Energy Company Nigeria Limited, First Capital Trust Limited, and Fidson Healthcare Limited, among others.
Contrary to the directive of the SEC that every piece of information or promise by issuers stated in the private placement prospectus must be carried out, the investors accused the managements of using the promises to lure them into investing huge funds in the offer, which later turned to stagnated investments.
It is a shame that most of the companies are still operating as they have disregarded their investors. If SEC did not impress us, I will report to EFCC to investigate the various activities of these companies over the years
Some aggrieved shareholders, who spoke with The Point in separate interviews, insisted that the probe would enable the apex regulator of the capital market to investigate the allegations of diversion of funds and misleading information levelled against the managements.
A civil servant with the Federal Ministry of Environment, Mr. Pius Okonkwo, alleged that the promise to list contributors on the Exchange was a ploy to deceive unsuspecting investors and rip them of their hard-earned money.
According to him, investing the sum of N280,000, N1.2 million and N120,000 on the shares of Acorn Petroleum, Trust Bond (when it was Intercontinental Homes) and LBIC, respectively, was a waste of money as he has not earned any dividend on them for 12 years.
He said, “They generated over N9 billion from investors with the promise of paying dividends and listing on the Exchange after two years, but we have been in the dark since 2006. When I tried to make enquiries, I was told to be patient, that they would soon list the shares in the market.
“It is a shame that most of the companies are still operating as they have disregarded their investors. If SEC did not impress us, I will report to EFCC to investigate the various activities of these companies over the years.”
A banker, who also invested in Acorn’s private placement but preferred anonymity, told our correspondent that he had lost confidence in the leadership of both SEC and NSE over what he described as negligence on their
part.
According to him, he and other colleagues have been allegedly defrauded over the years of their hard earned money by these companies.
He said, “Justice delayed is one denied. I suspect the management of SEC has compromised as the watchdog of the market. Are depositors’ investments lost for good? What happened to the investments of some of us that have died? Why is it taking time for EFCC to investigate the allegations after receiving several petitions from investors?”
He added that there was a need for the regulators to reassure the investment public that there funds were safe with any company raising fund from people through every available means.
“I demand an urgent, detailed investigation into the activities of these companies in the past years, in order to know whether the funds were used in accordance with their memorandum of private placement. They must confirm if the money was not diverted for other personal use,” he added.
THERE WAS NO REGULATOR BETWEEN 2006 AND 2009 – SHAREHOLDERS’ GROUPS
However, leaders of shareholders’ groups have argued that the victims of the private placement should neither blame the SEC nor the NSE for their predicaments as there was no agency performing an oversight function on the segment between 2006 and 2009, when most of them bought the shares.
The President, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, explained that there were a lot of errors noticed during the years the placement offer was done in the
market.
He said, “No agency offers any control, checks and balances on the activities of the companies and that is the reason many unsuspecting Nigerians fell for their lies and deceits. They operated at will and defrauded Nigerian investors.
“But now, the present management of SEC has done a lot to sanitise the system, as those days of coming into town to issue private placement without any form of control does not exist again. Everything now must be done according to the books, with investigations carried out carefully.”
Also, the President, Pragmatic Shareholders Association of Nigeria, Mrs. Bukola Bakare, urged the SEC and the NSE to further create an enabling environment, where investors’ lost confidence could be restored, pointing out that a lot of discrepancies that occurred in the past should not be repeated.
GIVE US MORE TIME TO LIST – FIRM
However, the managements of some of the companies have pleaded with investors that they need more time to list their shares on the Exchange.
The Managing Director, Trust Bond Mortgage Bank, Mr. Adeniyi Akinlusi, told The Point that his company needed more time to finalise the listing process.
He said, “A new investor has bought the company and we really need time to sort certain things out and list on the
Exchange.”
But efforts to get the management of LBIC were unsuccessful, as one of its senior management staff members, Ms. Bafunke Ajose-Adeogun, admitted that the offer was concluded but refused to speak on behalf of the management on why the shares were not
listed.
