When Abdulsamad Rabiu first listed BUA Food’s 18 billion shares on the Nigerian Exchange Limited (NGX) in January 2022, I bet he anticipated that day. Around this time a year ago, Rabiu was worth $4.5 billion, was the 574th richest man in the world and 6th on the African continent. But from today January 16, 2023the founder of BUA Group, has a net worth of $7.6 billion, is the 301st richest man in the world and Africa’s 4th (and Nigeria’s 2nd) richest man.
Rabiu is the founder of BUA Group, a Nigeria-based conglomerate with a diversified investment portfolio that includes business segments such as food, infrastructure, mining and manufacturing. The trajectory of his fortune began to change from the day – January 5, 2022 – when he listed the Initial Public Offering (IPO) of BUA Foods, the food division of BUA Group, on the Nigerian Stock Exchange.
When Rabiu BUA Foods listed on NGX at N40 ($0.087) per unit, little did he know that the stock would rise 10% in value on the same day, taking its valuation to N792 billion ($1.72 billion). USD) would limit. Food companies that merged to form BUAFOODS include BUA Sugar Refinery Limited, BUA Oil Mills Limited, IRS Flour, IRS Pasta and BUA Rice.
The IPO inspired investor confidence and boosted N44’s share price ($0.096). Currently, BUA Foods is the 5th most valuable stock on the NGX with a market capitalization of N1.34 trillion ($290.1 billion) – about 4.7% of the Nigerian stock market. The food segment of Rabius business empire started the year at a share price of N65.00 ($0.14) but closed on January 16th at N75 ($0.16) on the NGX. According to an analysis by Kwayisi, “Shareholders can be bullish on BUAFOODS knowing that the stock is up 18% over the past four weeks — the 19th best spot on NGX.”
What an IPO means for companies and investors
An IPO is the process of the initial public listing of shares in a private company as part of a new share offering. The process allows a company to raise equity from public investors. This in turn helps the company to expand, innovate, diversify and become profitable. An IPO means that the company is no longer a private company and has satisfied the requirements of a stock market. It transitions the company from a private to a public body and investors now have a stake. In the end, shareholders expect to receive rewards (or dividends) after a while.
What determines the success of an IPO is whether or not investors express optimism (confidence) in the company. In most cases, the performance, credibility or reputation of a company or its owners determine investor confidence. This helps potential investors form their opinion (opinion) about a company. This sentiment would determine their reactions and the performance of the IPO in the stock market. Thus, a business that is nonetheless profitable could fall out of favor with investors in the stock market.
Take Jumia, for example, a pan-African e-commerce startup from Lagos. On 04/12/2019Jumia was listed on the New York Stock Exchange with shares trading at $14.50 under the ticker symbol JMIA. The company was already successful back then. Three years prior to the IPO, Jumia had reached the $1 billion valuation following a funding round in which Goldman Sachs, AXA and MTN participated. Therefore, the IPO was initiated to create another growth path for Africa’s first unicorn. Initially, Jumia shares did well on the NYSE. But, about 3 weeks later, in May, its shares plunged 38%. This comes after Citron Research (a short seller) called Jumia an “obvious scam” in a research report. Since then, the company’s shares have underperformed on the NYSE as investors exited. Although Jumia stock has been rallying since last year, it closed trading on the NYSE on Friday, January 13th at $4.0200.
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