‘Bring Nairas, Buy Apple,’ Nigerian Stock Exchange Tells Nigerians

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Nigerians will soon be able to invest in companies such as Apple Inc. and LVMH Moet Hennessy Louis Vuitton SE in their local currency at their local bourse.

Not that these global companies are looking to sell shares in the African nation yet. The Nigerian Stock Exchange plans to get custodian firms to issue depositary receipts against their stocks and offer them for trading in Lagos. The unsponsored offerings would come from the holdings of the custodians and would not involve the concerned companies.

Nigeria, Africa’s largest economy, is trying to develop its stock exchange by increasing liquidity and the products available for investors as it seeks to close the gap with South Africa, home to the continent’s biggest equity market.

“We’re looking to start with those with substantial business dealings in Nigeria, or a substantial Nigerian following,” Chief Executive Officer Oscar Onyema said in an interview on June 25. “For example, we know that Nigerians buy a lot of Apple and Louis Vuitton products. Nigerians also follow soccer. So, any football club that is listed is a potential.”

Apple and LVMH didn’t immediately reply to e-mails requesting comment. Depositary receipts represent a stake in a foreign company that investors in a country can buy and sell with their local currency. Sponsored offerings involve the consent and participation of the companies, while unsponsored issues are made by depositary banks.

Year-End Deadline

The exchange will finalize the details of the plan by the year-end, Onyema said at a Bloomberg conference at bourse premises. It is seeking clarity from the National Pension Commission on whether pension funds would be allowed to invest in them, he said.

Onyema is also waiting for the central bank to state whether there will be any restrictions on the trades, following new foreign exchange rules. On June 24, the regulator banned Nigerians from using the interbank currency market to buy Eurobonds and foreign shares.

On the premium board the NSE plans to start this year, Onyema said four local companies have qualified for the list. He declined to disclose them.

There should be “something closer to eight or nine companies” on the premium board when it opens, according to Onyema. It is designed for companies that pass a corporate governance test set by the NSE and have a market value of more than $1 billion, he said.

“They will provide a vehicle for local and international investors that want to track well-governed institutions to benchmark,” Onyema said.

The Nigerian Stock Exchange Index rose 1.2 percent on Monday, its first gain in five days, cutting its loss over the past year to 22 percent.

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