A growing power tussle is unfolding at NASD PLC as VFD Group PLC, a key stakeholder, calls for a strategic overhaul of the alternative market platform ahead of its 11th Annual General Meeting (AGM).
The proprietary investment firm has expressed dissatisfaction with NASD’s financial performance, governance structure, and its failure to meet shareholder expectations.
VFD Group, a significant player on NASD’s board, voiced its concerns over the company’s recurring losses and declining revenue.
NASD has posted losses in eight of its eleven years of operation, with back-to-back losses ofN79 million andN69 million in 2022 and 2023, respectively.
Revenue also dropped from N660 million five years ago to N557 million in 2023, with trading fees and commissions accounting for N295 million of that, largely driven by just two companies: CSCS Plc and VFD Group Plc.
VFD Group’s push for strategic change
VFD is advocating for NASD to adapt to evolving market demands, particularly from younger, tech-savvy investors.
The investment firm believes NASD must capitalize on alternative investment trends that appeal to this demographic.
- However, it also pointed out that NASD’s current business model is outdated and has failed to deliver the expected returns.
- Adding to its concerns, VFD highlighted inconsistencies in the governance of NASD, specifically around the re-election of directors.
- VFD noted that newer board members were up for re-election, while longer-serving directors remained, a practice it said was against Securities and Exchange Commission (SEC) guidelines. This governance flaw, VFD argues, could undermine investor confidence in the company.
Despite these issues, VFD has pledged support for all resolutions to be proposed at the AGM, affirming its commitment to collaborate with NASD’s board and management to enhance shareholder value.
However, the firm insists that significant strategic shifts are essential for NASD’s future success.
NASD MD’s response
In an internal communication to the board, obtained by Nairametrics, NASD Managing Director Eguarekhide Longe responded to VFD Group’s concerns, portraying them as a struggle for control rather than a push for genuine change.
Longe, who is highly respected in Nigeria’s capital market, defended NASD’s governance and transparency, stating that VFD already has significant influence on the board and allies within the company.
- Longe acknowledged the pressure on NASD to perform but emphasized the complexity of running a market infrastructure platform, particularly one that does not rely on compulsory listing fees, unlike its peers in the debt capital market.
- He argued that NASD has made consistent efforts to expand its value proposition and that no idea for growth, including those from VFD, has been turned down.
- “The real issue is not resistance to change; it’s the natural challenges of transforming a restricted market,” Longe wrote. He also pointed to a “trust deficit” and a superiority complex among some stakeholders, which he said has hindered collaboration.
Longe assured that NASD’s position in the capital market would soon become evident as the company works toward creating long-term value.
- “We will never have this conversation again because the value NASD brings to the capital market will become obvious,” Longe stated.
Investor impatience and board shakeup calls
Behind the scenes, investor frustration is brewing. An industry analyst, speaking to Nairametrics, noted that NASD’s financial struggles, coupled with its weak governance, have become a major point of contention.
As NASD approaches its 11th AGM, all eyes are on the company’s next steps. With VFD Group pushing for a strategic overhaul and investors growing impatient, the AGM is shaping up to be a decisive moment for NASD’s future.
The company faces increasing competition from NGX and FMDQ, both of which are rapidly expanding their market share.
For NASD to remain relevant, the company will need to adapt quickly to the evolving financial landscape and explore new ways to attract and retain investors. Whether Longe and his team can meet these challenges and lead NASD into a new era of growth remains to be seen.