In periods of positive market movements, listings tend to increase, while delisting predominantly occurs during negative market conditions. Unfortunately, the Nigerian listed equities market has recently seen a few de-listings and prepares for some prospective de-listings, prompting the need for a cautious evaluation of market conditions to prevent a complete loss of investor confidence. On July 26, 2023, the Nigerian Exchange Limited (NGX) announced the delisting of Ardova, involving the entire 1.31 billion issued share capital. This action was taken in line with a Scheme of Arrangement between Ardova and its fully paid ordinary shareholders of 50 Kobo each, as approved by the Securities and Exchange Commission (SEC) and sanctioned by the court.
Analysts point out two possible reasons behind Ardova’s delisting. Firstly, Ardova’s shares were at the centre of a debt fracas between Zenon Petroleum & Gas Limited, the previous owner of Forte Oil Plc (now Ardova), and Prudent Energy and Services Limited, the parent company of Ignite Investments and Commodities Limited, which is now the major shareholder in Ardova that has bought out the minority investors. Although the issue has remained removed from public notice, Ignite I&C Ltd may be looking to manage the company along different lines. Secondly, Ardova’s financial performance has been lacklustre compared to its peers in recent years. The company reported losses of N3.84bn in 2021 and a larger N7.61bn in 2022, in contrast to the N1.86bn profit declared in 2020. These loss positions likely prompted the major investor to reevaluate the company’s business model. Meanwhile, the rise in de-listings suggests a pressing need for market reforms that would discourage companies from jumping ship at the whiff of operating discomfort. Implementing policies that are market-friendly and foster the growth of companies is a step toward achieving this goal.
