A growing debate within Nigeria’s capital market is forcing a hard look at one long-standing practice that many believe is holding the market back: listing by introduction. As the Nigerian Exchange seeks deeper liquidity, stronger valuations and increased global relevance, market observers argue that the continued reliance on listing by introduction runs counter to the very purpose of a public exchange.
While listing by introduction offers convenience to issuers, convenience is not the primary objective of capital markets. The fundamental role of an exchange is price discovery, and listing by introduction undermines this process from the outset.
Under this method, companies list their shares without raising new capital and without subjecting the stock to a competitive pricing process. Shares simply appear on the trading board at an assumed valuation, often disconnected from real investor demand.
The result is a price that is frequently arbitrary, illiquid and unsupported by market participation. Investors are left without a clear signal of fair value, while the market loses a critical data point that should accompany any new listing: what investors are actually willing to pay.
Beyond valuation concerns, the practice weakens overall market confidence. A public listing should represent a moment of transparency and engagement. It is typically when management articulates its equity story, fields investor questions and submits itself to scrutiny.
Listing by introduction bypasses this process entirely. There is no formal investor engagement, no price tension and no narrative building. The company avoids hard questions, while the market is denied insight into the business.
This silence often carries consequences. Liquidity tends to be weak from the first day of trading, and many such stocks gradually fade into obscurity. Thin trading becomes the norm, limiting institutional participation and reducing the relevance of the stock within market indices.
There is also a broader issue of fairness. Companies that list through public offers must meet extensive disclosure requirements, invest in marketing and engage investors throughout the pricing process. Allowing others to enter the market without this discipline creates an uneven playing field and lowers the overall quality of listings on the Exchange.
However, the challenge extends beyond listing mechanics. The Nigerian Exchange faces a deeper structural issue: the absence of enforceable minimum investor relations standards.
For Nigeria to position itself as a credible destination for both domestic and international capital, transparency cannot remain optional. At a minimum, every listed company should be required to maintain accessible and functional investor relations channels.
This includes identifying a named investor relations lead or responsible senior executive and providing a reliable contact email address. Currently, many listed companies are effectively unreachable, sending a negative signal to existing and prospective investors.
Regular communication should also be standardised. Quarterly investor presentations should be mandatory, not discretionary, and should adhere to minimum disclosure benchmarks. Investors should consistently receive information on financial performance, business segments, capital allocation, strategic priorities, risks and outlook.
In addition, management teams should be required to host at least one investor call annually following the release of full-year results. Silence is not a strategy. Investors expect management to explain performance, provide context and respond to questions in real time.
Local investor roadshows should also be encouraged as a baseline expectation. Public capital comes with public accountability, and engagement should be part of the cost of accessing the market.
Poor investor relations have direct market consequences. Information gaps lead to uncertainty, and uncertainty is inevitably priced as risk. This manifests in low liquidity and discounted valuations.
While many Nigerian companies complain about being undervalued, the discount is often self-inflicted. Weak disclosure and limited engagement make it difficult for investors to assign confidence premiums.
There is also a governance dimension. Regular engagement promotes discipline, reduces the likelihood of surprises and aligns management more closely with shareholder interests. Markets with strong disclosure cultures tend to surface problems early, reducing systemic shocks.
From a national perspective, the stakes are even higher. Nigeria requires deeper and more credible capital markets to support long-term growth, pension assets and domestic savings mobilisation. That goal cannot be achieved in a market where listings are passive and communication is optional.
Ending listing by introduction and enforcing baseline investor relations standards would not be a radical shift. It would simply signal that the Nigerian Exchange is committed to quality, liquidity and long-term credibility. The real question facing the market is no longer whether it can sustain higher standards, but whether it can afford not to.
