Nigeria Revises Free Float Rules to Boost Market Liquidity

Nigeria is set to unlock liquidity from tightly held stocks by revising its free float requirements for publicly listed companies. Temi Popoola, Chief Executive Officer of the Nigerian Exchange Group, announced that companies must maintain a minimum public shareholding of 20% if valued at least 40 billion naira.

This move is in response to MSCI Inc's decision to tighten its measures, which has led passive investors to divest from Nigerian stocks. Currently, Dangote Cement Plc has a free float of 11%, while BUA Cement Plc, Nigeria's second-largest company, has less than 3% available for trade.

The Nigerian Exchange Group will work with the Securities and Exchange Commission to review these free float levels and ensure accurate data capture. The initiative aims to deepen the equity market and attract foreign inflows, building on Nigeria's large retail investor base.

Peter Omoregi, Managing Director of CardinalStone Securities Ltd, stated that increasing free float requirements will enhance market liquidity.