WAMCO gains 62 % on NASD as OTC market creates value

Friesland Campina WAMCO Nigeria Plc shares have gained 62 percent since listing on the NASD a sign of the value creation potential inherent on the platform.

The ordinary shares of Friesland Campina WAMCO Nigeria Plc were admitted to trade on the NASD OTC platform on 15 July 2013 as the 2nd security to enter the formal OTC market.   

At entry, the 1 denominated shares were quoted at 500:00 each.

By November 2013, WAMCO shares were trading at 520:00 per share on the NASD OTC market when the Board of Directors announced a change in nominal value of its shares from 1 to  0.50 (essentially a share split of two new shares replacing each old share).  

On the effective date of the split, NASD adjusted the price of the security correctly to 260.00 thereby holding portfolio value constant for the day.  

As at October 31, 2014, the stock closed at 420 per 50 kobo share representing a 62% capital gain for investors in the stock over the 12 month period.

“At NASD, we believe the OTC market creates visibility for unlisted stocks,” Bola Ayomale, CEO of NASD, said in a recent newsletter.

“We provide investors with the means to find the real value of their investments (as opposed to guesswork) and we also make vital trade statistics available to issuers which may guide their future corporate actions.  We welcome other non-listed corporates to take advantage of the transparency and liquidity of the OTC mark,” Ayomale said.

Meanwhile transactions on NASD OTC are now exempt from Value Added Tax [“VAT”] for the next five years. 

The VAT exemption is effective immediately on all commissions applicable to capital market transactions which are earned on traded values of shares and payable to the Securities and Exchange Commission [“SEC”], NASD and Central Securities Clearing System [“CSCS”].

This implies a 6 percent drop in the cost of transactions and puts more value in the hands of the investor. 

“We believe the reduction in costs improves the attractiveness of the OTC market and may have a positive effect on the level of secondary market activity in the future,” Ayomale said.

PATRICK ATUANYA

Source : BusinessDay

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