Flutterwave plans to list on Nigeria’s NGX, which could provide benefits like easier capital access and enhanced company profile. However, the company struggles with profitability, a key concern for investors in Nigeria. Regulatory obligations and macroeconomic factors may also pose significant challenges. Therefore, Flutterwave must consider strategic options to address these hurdles and enhance the potential for a successful listing.
Flutterwave, a prominent fintech company, intends to list on Nigeria’s Nigerian Exchange Group (NGX). Founded in 2016 by Olugbenga Agboola and Iyinoluwa Aboyeji, the company achieved unicorn status in 2021 and now operates across several African nations, including Ghana, Kenya, and South Africa. While it is not the first fintech to list on the NGX, its relatively new status raises questions about potential success in the Nigerian market.
The advantages of Flutterwave’s public listing include better access to affordable capital, enhanced liquidity for shareholders, and increased transparency in company valuation. For Nigeria, the listing could enhance the technology sector’s reputation and attract foreign investments, thus injecting valuable foreign exchange into the economy.
However, Flutterwave struggles with profitability, which is a critical factor for Nigerian investors. Reports indicate that the company has yet to achieve profitability, and the current economic climate in Nigeria fosters impatience among investors. Many local funds primarily seek dividends, posing a challenge for Flutterwave in attracting substantial local investments.
Upon listing, Flutterwave would face stringent regulations and obligations. Fulfillment of these requirements would include providing historical audited financial statements, meeting revenue growth benchmarks, and maintaining a specific number of shareholders. There exists a possibility that Flutterwave may not qualify for the main board of NGX, though an alternative “Technology Board” with reduced criteria may offer a solution, albeit with limitations on retail investor participation.
The prevailing macroeconomic conditions in Nigeria can significantly impact the success of listings on the NGX. Historical data shows that favorable economic trends can facilitate easier share listings. In recent times, apart from regulatory enforced listings among banks, only a limited number of non-banking companies managed to go public in 2024 with a decline in average trading volumes post-listing.
It is likely that Flutterwave may encounter challenges similar to those faced by other recent non-bank listings. Present economic conditions indicate a negative interest rate-inflation differential, highlighting a challenging market environment for new public offerings. Therefore, pursuing a listing under such circumstances may present substantial risks for Flutterwave.
To mitigate potential issues, it could be beneficial for Flutterwave to explore additional avenues for investment, such as issuing American Depository Receipts (ADRs) to lure foreign investors and enhance its chances of success in the market.
In summary, while Flutterwave’s upcoming listing on the Nigerian Exchange Group presents several advantages, including accessibility to capital and potential foreign investments, it is accompanied by substantial challenges. The lack of profitability, stringent regulatory obligations, and adverse macroeconomic conditions serve as critical considerations. Therefore, careful assessment and strategic moves, such as leveraging foreign investment methods, will be essential for Flutterwave’s success in this venture.
Original Source: www.connectingafrica.com
