SEC Nigeria accepts NGX Technology Board Listing Rules; IPOs of tech startups in Nigeria are expected.

This one is major, and it arrives as the year 2022 winds down. Yes, the Securities and Exchange Commission has approved the listing guidelines for the new Technology Board of the Nigeria Exchange. With this strategy, firms such as Flutterwave, Interswitch, Touch & Pay, etc. may have a clear path to the public market without having to purchase plane tickets to London or New York.

Apart from the prospect, the most important factor is the investor: how would they value these businesses? When I observe that eTranzact International Plc is valued at $53 million, I infer that NGX retail investors need further education on technology and its prospects.

Nonetheless, this is a positive development: Nigeria needs its NASDAQ. We may introduce new species into the world, including Omatek Plc, Courteville Business Solutions Plc, NCR Plc, Chams Plc, Computer Warehouse Group (CWG) Plc, Tripple Gee & Company Plc, Airtel Africa Plc, MTN Nigeria.

The NASDAQ-style board is a specialized platform for technology businesses to list on The Nigerian Exchange and raise money. The primary objective is to stimulate investments in indigenous technologically minded enterprises and others around Africa, to increase awareness of these companies, and eventually to expand the Nigerian capital market.

Nigerian Exchange Limited CEO, Temi Popoola.

Institutional investors, retail investors, and high-net-worth investors will have access to the Technology Board's securities.

In a statement released on Monday, Temi Popoola, CEO of NGX, said the SEC approval "will position the exchange as an appealing location for capital formation by enterprises within the technology sector."

Procedures for the Nigerian Exchange Technology Board

According to the bylaws, the Technology Board is divided into two segments: Start-Up Tech and Big Tech, with varying standards depending on market capitalization.

"Start-Up Tech Segment" is the Technology Board’s platform for listing eligible entities and

financing start-ups and fintech companies with market capitalizations between ₦420,000,000.00 (Four Hundred and Twenty Million Naira) and ₦42,000,000,000.00 (Forty-Two Billion Naira).

"Big Tech Segment" is the Technology Board’s platform for listing eligible entities and

financing technology companies with a market capitalization above ₦42,000,000,000.00 (Forty-Two Billion Naira).

To be listed in the Start-Up Tech Segment, the company in question must meet the following requirements:

1. Be a public company limited by shares, or where a private company reregisters as a public company or incorporates a Special Purpose Vehicle (SPV) or Holding Company as the public company to be listed.
2. A core investor or strong technical partner with a minimum of one (1) year operating track record.
3. A minimum number of two (2) shareholders or such number of shareholders as The Exchange may determine from time to time.
4. An operating track record of at least twelve (12) months before the date that The Exchange receives the Issuer’s application to list on the Start-Up Tech Segment.
5. An estimated minimum market capitalization of not less than Four Hundred and Twenty Million Naira (₦420,000,000.00) but not above Forty Two Billion Naira (₦42,000,000,000.00) on the date that The Exchange receives its application for listing on the Start-Up Tech Segment;
6. If raising capital at the point of listing, has a minimum float requirement of five percent (5%) of its issued share capital or has the value of its free float equal to or above Twenty Million Naira (₦20,000,000.00) on the date The Exchange receives the Issuer’s application to list.
7. Meet other listing requirements as stipulated by The Exchange from time to time.

Similarly, to be listed in the Big Tech Segment, the company in question must meet the following requirements:

1. Be a public company limited by shares or where a private company reregisters as a public company or incorporates a Special Purpose Vehicle (SPV) or Holding Company as the public company to be listed.
2. A core investor or strong technical partner with a minimum one-year operating track record.
3. A minimum of five (5) shareholders or a such number of shareholders as The Exchange may determine from time to time.
4. An operating track record of at least twelve (12) months before the date that The Exchange receives the Issuer’s application to list on the Big Tech Segment.
5. If raising capital from the public at the time of listing, has a minimum free float requirement of ten percent (10%) of its issued share capital; or has the value of its free float equal to or above Two Billion Naira (₦2,000,000,000.00) on the date that the Exchange receives the Issuer’s application to list.
6. Achieves a market capitalization above Forty-Two Billion Naira (₦42,000,000,000.00) on the date The Exchange receives the Issuer’s application to list on the Big Tech Board.
7. Undertakes to ensure that its promoters or directors retain a minimum of fifty percent (50%) of their shares in the issue during the lock-up period and that they do not directly or indirectly sell or offer to sell such securities during that period.
8. Meet other listing requirements as may be stipulated by The Exchange from time to time.

The methods for the listing of securities on the Technology Board include the following: Direct Listing, Initial Public Offer (IPO), Memorandum Listing, Accelerated Book Building, Dual Listing, Reverse Acquisition/Takeover/Merger, Depositary Receipts, Special Purpose Acquisition Companies (SPACs), and any other method that the Board of NGX may prescribe from time to time.

The document also covers eligibility to remain on the Technology Board, corporate governance requirements, fees, transfer or migration between listing segments, fees, and sanctions.

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