Local investors fear ‘forceful takeover’ by foreigner, against converting dividends to shares

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The Nigerian Stock Exchange
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Local investors have expressed fear that economic challenge in Nigeria, said to have continued to dampen investment drive and trigger apathy in the Nigerian capital market since the 2016 recession and now fueled by the effect of COVID-19 lockdown may lead to a forceful takeover of investments by foreigners.

The Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said if the Federal Government fails to make Forex available to foreign investors to repatriate their dividend, it would not only push local investors away from multinationals operating in Nigeria, it would also increase the quantum of unclaimed dividend in the capital market.

“If they find it difficult at the Forex market, they may decide to buy more shares with the money and if this happens, Nigerian investors will be short-changed while foreign investors will eventually take over the companies.

Omordion exercised fear about the unhealthiness of the situation for the market and urged that local investors must be encouraged to participate actively in multinational firms to create more wealth for the country.

The fear is might be valid as a research by The Guardian revealed that foreign investors constitute a large proportion of unclaimed dividends in multinational firms listed on the Nigerian Stock Exchange (NSE) such as Nestle, Unilever, and Nigerian Breweries, among others.

It was further reported that shareholding structure of Nestle Plc, the biggest multinational company on the NSE showed that Nestle S.A Switzerland controls 66.50 per cent, while Stanbic IBTC Nominees hold 6.28 percent. Free float (Others) constitute 27 per cent. For Unilever Plc, Unilever Overseas have 75.96 per cent stake Stanbic IBTC Nominees control 5.01 per cent, while 19.03 per cent is free float.

“The Securities and Exchange Commission (SEC) and NSE have been working hard to reduce the quantum of unclaimed dividend so that people will have access to their return on investment.

“Government should find a way to make sure that these people have access to Forex, even if they want to invest, it should be a fresh investment. Before now, they find it easy to repatriate their money and that is why they can invest more because they know that they are getting good returns from Nigerian companies” Omordion said.

Sunny Nwosu, the founder of the Independent Shareholders Association of Nigeria (ISAN), said local investors are ready to sell off their shares to foreign investors at any additional value on the share price.

“If they add N10 or N20 to the value of shares, Nigerians will sell because there is much hunger in the land, most of these retail shareholders have no money to meet needs of their families.