…As Official says Dangote Cement share buyback to be completed in 12 months***
The Nigerian equities market sustained negative trend on Wednesday with investors losing N3bn as market indices marginally drop by 0.02 per cent.
Speficially, the All-Share Index dipped 4.55 points or 0.02 per cent to close at 29,458.21 compared with 29,462.76 recorded on Tuesday.
The market capitalisation lost three billion naira or 0.02 per cent to close at N15.173 trillion against N15.176 trillion achieved on Tuesday.
The downturn was impacted by loses recorded in medium and large capitalised stocks, amongst which are, Julius Berger, Flour Mills of Nigeria, NASCON, Lafarge Africa and Zenith Bank.
Capital market analysts attributed the decline to profit taking embarked by investors on highly capitalised equities.
Analysts at Afrinvest Limited expected bargain hunting to dominate the market in the near term.
The market breadth closed with 15 gainers and 18 losers.
Law Union and Rock Insurance dominated the gainers’ table in percentage terms, gaining 10 per cent to close at 60k per share.
AIICO Insurance followed with a gain of 8.64 per cent to close at 88k, while Honeywell Flour Mills rose by 8.33 per cent to close at N1.17 per share.
Cutix improved by 5.15 per cent to close at N1.43, while Abbey Mortgage Bank rose by five per cent to close at N1.05 per share.
Conversely, Julius Berger led the laggards’ table in percentage terms, dropping by 6.76 per cent to close at N20 per share.
NASCON trailed with a loss of 4.46 per cent, to close at N15, while Courteville shed 4.17 per cent to close at 23k per share.
Transcorp dipped by 3.74 per cent to close at N1.03, while Lasaco Assurance went down by 3.70 per cent, to close at 26k per share.
Total volume traded rose by 15.7 per cent to 315.67 million shares, valued at N3.64 billion, and exchanged in 4,392 deals.
Transactions in the shares of Austin Laz topped the activity chart with an exchange of 85 million shares valued at N174.41 million.
Access Bank traded 60.52 million shares worth N600.92 million, while Guaranty Trust Bank sold 26.46 million shares valued at N849.98 million.
Zenith Bank accounted for 25.73 million shares worth N564.76 million, while United Bank for Africa traded 16.86 million shares valued at N144.05 million.
In all, investors bought and sold 315.67 million shares worth N3.64 billion achieved in 4,392 deals.
This was in contrast with a turnover of 272.84 million shares valued at N3.71 billion shares transacted in 4,945 deals on Tuesday.
Also read: NSE market capitalisation loses N127bn
In the meantime, Dangote Cement shareholders on Wednesday unanimously endorsed the company’s share buyback plans to be completed in 12 months.
The shareholders gave the approval at the company’s Extra Ordinary General Meeting (EGM) held in Lagos.
Share buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market.
Companies buyback shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.
The Dangote Cement, which currently has 17.04 billion fully paid up ordinary shares of 50k each, would be buying back 1.70 billion shares.
Speaking at the meeting, the shareholders commended the company’s board and management for coming up with another scheme that would enhance share value and as well ensure more returns on their investment.
Specifically, Mr Sunny Nwosu, Founder, Independent Shareholders Association of Nigeria, said shareholders would forever appreciate the “share buyback” plan of the company, especially at this time of the year.
“I think Alhaji Aliko Dangote is learning from Microsoft, where Bill Gates also buyback shares of Microsoft.
“I want to sincerely congratulate Aliko on this noble idea.
“In 2008, Independent shareholders Association sponsored a seminar on share buyback because of its value and importance.
“As shareholders, we have been clamouring for share buyback for so many years, and today Aliko Dangote has given us hope.
“This is very good as against the practice of share reconstruction that is being practiced by some Nigerian companies which never gave back anything positive to the shareholders.
“The ‘share buyback’ was practiced in Ghana with just few companies listed on its Exchange.
“We are indeed very happy with this and we are also quite sure that with this that you have done today, you have proved yourself to be the best chairman of all the corporate companies in Nigeria.
“We are very delighted because we know that, this arrangement will lead to share price increase and more dividend for the shareholders,” Nwosu said.
He, however, encouraged other quoted companies to embrace the initiative instead of share reconstruction.
Earlier, Alhaji Mohammed Audu, President, Authentic Nigerian Shareholders Association, lauded the company for embracing share buyback.
Audu urged the company to ensure that money realised from the exercise would be used for investment purposes.
“The share buyback will ensure that the value of our share will go up and we are also sure of getting better dividend,” he stated.
The company’s Chairman, Alhaji Aliko Dangote, said that the shares would be repurchased out of the profits of the company.
He noted that number of shares bought under the programme was required to be cancelled in accordance with the Securities and Exchange Commission (SEC) rules and the Nigerian Stock Exchange (NSE) Rulebook 2015.
This, according to him, will consequently lead to a reduction in issued share capital.
The share buyback was going to be on terms and conditions determined by the board of directors.
The buyback programme would be completed within 12 months from the today.