Barely one week after THISDAY reported that the persistent decline in the Nigerian equities market has stalled merger and acquisition talks among operators in order to recapitalise, strong indications have emerged that the Securities and Exchange Commission (SEC) may shift the recapitalisation deadline from December 31, 2014.
SEC had given capital market operators till December 31, 2014 to comply with the new capital base, which requires an operator playing the role of broker dealer to have N300 million capital as against the existing N70 million.
The apex market regulator had insisted the December deadline was sacrosanct and advised those unable to recapitalise to merge or be acquired by others.
However, THISDAY gathered that the bearish market that has wiped off over N3.6 trillion in the last three months, has stalled most of the merger talks.
Market sources close to SEC said given the current bearish situation in the market and the need to be seen as being proactive and sensitive to the plight of operators, the commission is considering moving the deadline.
Although the source said the final decision was yet to be made, it was gathered that many of board members of SEC favour a shift in the enforcement of the new capital base.
“All of us operating in the economy and financial sector and know what is going on right now. It is will be a high level of insensitivity if a regulator, knowing that the market has lost over N3 trillion within three months, still goes ahead to close down the offices of operators because they fail to recapitalise. This is the line of thinking of many members of the board of the commission and I am sure the deadline will be shifted,” the source said.
The source added that operators who have been saving (by buying stocks) towards the recapitalisation, have lost significant part of their investments following the dip the market has suffered in last three months.
“It is has been really tough for operators and investors in the past weeks and it will be a big relief for us if it is true that SEC is planning to move the deadline from December 31, 2014,” a broker said.
While some operators had hoped on mergers and acquisition as a way out, the downturn in the market stalled that move.
The managing director of a leading stockbroking firm that had planned to acquire another smaller company had confirmed to THISDAY that everybody was more concerned about the negative trend in the market right now.
“My firms had actually planned acquiring a small firm that we know has some value proposition but may not meet the December 31, 2014. However, we have suspended that move for now because the negative trend in the market in the last few weeks is becoming a bigger concern,” he said.
According to him, there is no need to recapitalise when equities prices continue to crash and there seems to be no end to that trend. Thisday