Flutterwave, a leading fintech in Africa, plans an IPO on the Nigerian Stock Exchange, sparking aspirations for market revitalization. Recent discussions with President Bola Tinubu indicate potential growth for Nigerian equity. While the NGX has faced liquidity issues, a dual listing may enhance Flutterwave’s valuation. Despite a downgrade from FTSE Russell, recent reforms inspire optimism for the NGX’s future.
The Nigerian fintech giant Flutterwave, renowned for its leading payment solutions in Africa, is reportedly gearing up for an initial public offering (IPO) on the Nigerian Stock Exchange (NGX). This development raises expectations for a significant uplift in the market, which has faced inconsistent performance in recent times. Although detailed information about the IPO is still unavailable, Flutterwave executives recently met with President Bola Tinubu to discuss the company’s stock market introduction, which, if realized, would represent an important milestone for Nigeria’s equity markets.
The Nigerian stock market has historically struggled to attract substantial listings due to low liquidity, which often distorts share valuations. Several notable firms, such as Courteville Business Solutions, have opted to delist due to these liquidity issues, which contribute to undervalued share prices. To circumvent these challenges, Flutterwave might consider a dual listing strategy, utilizing both the NGX and international markets like NASDAQ. Other Nigerian entities, including Seplat and Oando, have successfully launched dual listings, enhancing their market positions and valuations abroad.
Despite the NGX experiencing considerable growth—with its All Share Index more than doubling since early 2023—it has encountered significant challenges. In September 2023, FTSE Russell downgraded Nigeria from a “frontier” market to an “unclassified” status, primarily due to ongoing foreign exchange challenges that hinder foreign investors’ profit repatriation. This downgrade impacted NGX’s reputation and led to a sell-off of Nigerian equities by index funds tracking FTSE Russell benchmarks.
Nevertheless, Flutterwave’s potential IPO, along with broader foreign exchange and economic reforms under President Tinubu, has invigorated optimism regarding the NGX’s future. Rume Ophi, an analyst based in Lagos, articulated that such a listing would inherently enhance Nigeria’s standing in global markets, indicating the country’s ability to produce more unicorns. He noted the government’s efforts to streamline business operations, albeit acknowledging the hurdles present in this process, expressing hope that Flutterwave’s confidence would inspire further corporate listings in Nigeria.
In conclusion, Flutterwave’s impending IPO on the Nigerian Stock Exchange represents a significant opportunity for both the company and the market as a whole. It is expected to enhance Nigeria’s equity landscape while demonstrating the country’s potential to yield successful tech startups. Furthermore, the efforts of the current government to improve economic conditions may bolster investor confidence and attract further opportunities in the Nigerian market.
Original Source: african.business
