Nigerian stock exchange hopes for Flutterwave IPO boost

The Nigerian fintech unicorn Flutterwave, one of Africa’s most prominent payment services providers, is reported to be preparing for an initial public offering (IPO) on the Nigerian stock exchange (NGX), raising hopes of a major boost to a market which has experienced mixed fortunes in recent years.

While specific details of the potential listing are yet to emerge, Flutterwave executives met with Nigeria’s president Bola Tinubu last week in order to discuss floating the company on the stock market. Securing such a commitment from Flutterwave, which became Africa’s fourth unicorn – a company valued at more than $1bn – after raising $170m in a Series C funding round in March 2021, would be a major coup for Nigerian equity markets.

Indeed, stock markets in Nigeria and across Africa have in the past struggled to attract major listings owing to an insufficient amount of liquidity which can distort prices. Several major companies in Nigeria – such as e-business Courteville Business Solution – have delisted in recent years over concerns that the low liquidity has led to rock-bottom share prices that do not necessarily reflect the fair market value.

A potential way around this for Flutterwave could be to explore a dual listing – floating both on the NGX and an international market such as the NASDAQ. Nigerian energy companies Seplat and Oando went public in Nigeria, and London and Johannesburg respectively, in order to secure stronger valuations and boost their credentials on international financial markets.

NGX eyes turnaround

While the Nigerian stock exchange has continued to grow in strength over the past two years – the NGX All Share Index has more than doubled since the start of 2023 – it has also faced several hurdles. In September 2023, the leading provider of market benchmarks, FTSE Russell, downgraded Nigeria from a “frontier” to an “unclassified” market.

This was largely because of longstanding foreign exchange difficulties which saw foreign investors struggle to repatriate profits from Nigeria because of capital controls and a shortage of US dollars. The move saw the NGX take a reputational hit and also meant that index funds and exchange-traded funds (ETFs) tracking the FTSE Russell had to sell-off exposure to Nigerian equities.

However, the recent news regarding Flutterwave’s potential IPO, alongside the broader package of foreign exchange and economic reforms which Tinubu has pursued, is boosting optimism about the NGX’s future prospects.

Rume Ophi, a financial markets analyst based in Lagos, tells African Business that the move would significantly improve the exchange’s global reputation. “Flutterwave’s potential listing would signal to the world that Nigeria does not lack the capacity to produce more unicorns. We have some of the smartest young people on earth and one of the most youthful populations in the world.”

“The current government is working hard to improve on the ease of doing business – it is not going to be easy, but steps are being taken to make the growth process faster,” he adds.

“Flutterwave’s confidence in Nigerian markets will hopefully encourage more companies to consider Nigeria as their next destination for listing and doing business.”