...Seeks international advisors
The Nigerian National Petroleum Company Limited (NNPC Ltd.) is once again charting a course towards an Initial Public Offering (IPO), signalling a renewed determination to tap into public markets.
This latest push for a listing comes after two previous attempts in 2018 and 2023, which ultimately did not materialise.
Olugbenga Oluwaniyi, the company’s chief finance and investor relations officer (CFIO), disclosed this at a consultative meeting with partners in Abuja, on Thursday.
He said NNPC Ltd was currently engaging with prospective partners in an exercise tagged, “NNPC Ltd. IPO Beauty Parade” in line with capital market regulations before the commencement of the Initial Public Offer (IPO).
According to the CFIO, the aim of the IPO Beauty Parade, is to access potential partners and determine in what ways they could be of support to the company.
He listed the areas of partnership required to include: Investor Relations, IPO Readiness Advisers, and Investment Bank Partners.
An IPO is a public offering in which shares of a company are sold to institutional investors.
“The company with the best offer in terms of project partnership would be selected for each of the three categories,” Oluwaniyi said.
This isn’t the first time the idea of an NNPC IPO has been floated.
In 2018, under a different management structure of Emmanuel Kachikwu, petroleum resources minister of state and managing director, Nigerian National Petroleum Corporation (NNPC), there were preliminary discussions and some preparations made towards a potential listing.
However, that effort did not progress to a full-fledged IPO for various reasons, including market conditions and internal restructuring challenges at the time.
Read also: Capital market listing imminent for NNPC as it announces plans for IPO
NNPC) Ltd, became a commercial venture company on July 19, 2022, after the Petroleum Industry Bill became law the previous year. Mele Kyari, Group CEO of NNPC, had previously said the company would be ready to launch an IPO by mid-year in 2023 during a transition ceremony.
The NNPC was expected to be ready for an IPO by the end of the second quarter 2023, according to the NNPC Ltd’s quarterly report but this is yet to happen.
The corporation is yet to publish its audited accounts for 2024 and its books require thorough cleaning after years of subsidising petrol and intervening in various sectors of the economy.
An initial public offer process can be a long and complex one for any company but for the NNPC Ltd which published its first audited accounts in 2023 after four decades of operation and who since then has struggled to keep the books in order, the process becomes quite complicated.
Analysts say the NNPC Ltd has to strengthen it financials in order to attract investors. This means having a positive cash flow, a low debt-to-equity ratio, and a growing revenue stream.
The state-owned oil firm would also need to clean up its image and improve on corporate governance practices. Having long operated like a regulator, the NNPC Ltd would need to convince its partners and would-be investors that it would shun its cavalier approach when dealing with them and pay its own share of costs in oil development plans.
The PIA provides for the NNPC Ltd to list its shares in the capital market in line with the provisions of the Company and Allied Matters Act (CAMA) 1990.