N500m private placement begins for Lagos Commodities & Futures Exchange

The raising of the initial capital for the proposed Lagos Commodities & Futures Exchange (LCFE) kicked off on Tuesday in Lagos. Stockbrokers, investment bankers and other financiers met yesterday to flag off the private placement for the LCFE.

The proposed Lagos Commodities & Futures Exchange is expected to trade in currency, commodities, oil and gas and solid minerals. The Association of Stockbroking Houses of Nigeria (ASHON) is the main promoter of the Lagos Commodities & Futures Exchange.

According to the Memorandum of the Private Placement, 500 million ordinary shares of N1 each would be offered to investors at N1 per share. The net proceeds of the private placement will be used to fund the start-up and operational take-off costs, administrative and personnel costs of the LCFE as well as leasing of a trading platform for the trading of qualifying derivatives including options, futures and spots among others.

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By private placement, the shares of the company will be offered to high networth investors and other professional financiers who are expected to form the initial shareholders’ base of the company. The Lagos Commodities & Futures Exchange is expected to follow the demutualised model of the NASD Plc, the over-the-counter promoted by related capital market professionals.

Stockbrokers, who form the majority of the owner-members at the Nigerian Stock Exchange (NSE) and NASD, are expected to form the majority owner-members in the LCFE as the fund raising framework gives stockbrokers first right of refusal.

The first right of refusal implies that all subscriptions by stockbrokers will be allotted, after which any other shares will be allotted to other group of investors. However, the fund raising framework makes provisions for few strategic investors in order to secure the capital and know-how needed for effective take-off of the LCFE.

Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), had earlier expressed its readiness to give all necessary supports for the realisation of the proposed Lagos Commodities & Futures Exchange as part of efforts to mainstream the capital market into national development.

Director General, Securities and Exchange Commission (SEC), Mounir Gwarzo, who spoke during a courtesy visit to the Commission by the executives of ASHON, said SEC would support the Lagos Commodities & Futures Exchange and other similar initiatives as part of its overall responsibility of development of the Nigerian capital market.

 

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