If there is a single cause for joy and celebration derivable from the just introduced Dangote Refinery Initial Public Offer (IPO), it would not be the ringing of the Stock Exchange bell to throw it open to the man on the street. Neither would it be the laudable figures of trillions of Naira already invested, or the billions more Nigerians are licking their lips to make in the not too distant future. Rather, the cause for exhilaration are the stupendously crafted cartoons, memes and rib cracking social media retorts that followed the launch.
If prior to the shares’ introduction to the capital market, Alhaji Aliko Dangote entertained any personal thoughts of exclusive ownership, such imaginations went up in smoke the minute the first individuals bought their first precious batch of ten shares at N525 each at a mind blowing N5,250! As the momentum built and trading exploded to a whopping N1.5 Trillion in just the first one hour, hundreds of thousands of moms and pops became shareholders to probably the biggest and most audacious business venture ever embarked upon in tropical Africa.
Lo and behold, the behemoth of an industry had suddenly transitioned from my company to our company. At least, as presented for laughs in popular media, the average investor now felt a sense of shared ownership. For a little token or by substantial stake-holding, a familial relationship had been established with Africa’s wealthiest man. There was now the tenuous understanding that that white truck with the blue eagle emblazoned on it was freighting not just processed fuel, but also the future fortune of households, the next school fees, the next cement block that will form the cornerstone of the family house. It was carrying hope and aspiration. And, the joy of it is that we can laugh about it, even as hard earned, already overstretched resources are joyfully diverted towards taking a stake in this new economic nirvana. Yes! It is our lorry. “Alhaji! How is our company doing this morning”. “Can you imagine? The traffic light had the temerity to stop our lorry at Alasia Roundabout! No respect at all.” All well and good. So long as things turn out as rosy as the pink spectacles portray the world around it. In reality, investments, IPOs in particular, have not always turned out as beautifully as they are played up to be. Those who have been following the stock market for some time will remember clearly that we’ve been down this route before.
They will remember the great First Bank offering of 2007. While it was not the only shares on offer then, it was by leaps and bounds the most orchestrated. There was just no dodging the fanfare and the prodding. From the media saturation, the commendations from ‘gurus’, to a live elephant swaying down the commercial district of the Lagos Marina, it was a memorable roadshow. And did it succeed? Of course! It did. The offer was oversubscribed by an eye popping 750%!!! Most investors did not get more than a paltry 10-15% of their subscription. In some cases, the interest on the loans taken to make the purchase was higher than the worth of the final number of shares allocated to investors. The rest, as they say, is history, as the worth of most shares soon tanked in the global financial meltdown that caught up with the Nigerian capital market in 2008-2009.
Those who didn’t go down with that wave are still licking their wounds over a decade later. One of the intrinsic attributes that keeps us happy as human beings is the ability to forget. The ease with which we walk away from setbacks, calamities and pain, and wake to a new day as if untouched by fate. Unfortunately, it is also the one aspect of our nature that induces us to make the same mistakes over and over again. If only we followed the principle of `once bitten, twice shy’ we would think in quadruples before we take future steps that clearly embody errors or missteps of the past.
To be clear, not everyone that put money on stocks then or now is a loser. The continued admonition is that no one is advised to invest more they can lose. It is not wise to risk the roof over your head on any promise of future returns or to recklessly borrow to the point of erasure. The lucky few, who bought those shares at that same time with money they could afford and were not panicked or compelled by desperate circumstances to sell at a loss, waited out the thin years. They later smiled to the bank with rich dividends and galloping share prices.
Which takes us back to the drumbeat of the here and now, the Dangote Refinery IPO. The question must be asked. Is the excitement generated based on any premise of guaranteed return on investment? Have the multitude teeming to make the purchase gone over the short, medium and long term possibilities of their commitment? Is this fervour based on clinical thinking or the thrill of societal pull? Are we approaching serious equity issues with the same mindset as ‘Aso-Ebi’? As we all know, when the party is over and we’re done “showing dem”, the N500k lace fabric goes into the dark cupboard, never to see the light of day again. A lot of the pain derivable from making financial decisions come from marching to the bandwagon effect. It is easy to reach giddy heights when every business magnate, corporate leader, kabiyesi and man of the cloth is clanging the bell for a single purpose. It is easy to believe that there is something they know that we don’t perceive. The wish to not miss the boat is sadly the reason why many go to sea without life jackets.
After all is said and done, are you going to be out there riding the waves? Or left floundering in the ebbs, struggling to make the shore? Emiko Aruofor Market Observer
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