BUA Owner, Rabiu Abdulsamad Acquires 500m Stock Amid Slide In NGX Free Float

Despite his company’s failure to meet the free float rule of the Nigerian Exchange Limited (NGX), Nigerian billionaire, Rabiu Abdulsamad, has just acquired five million stock.

Naija News understands that Abdulsamad, through BUA Industries Limited, a majority shareholder of BUA Foods, increased his indirect shareholding in the sugar producer by purchasing a total of 500,000,000 shares on January 5, 2022.

BUA Industries Limited is reported to have dolled out the sum of N20.12 billion to acquire the said stock, bought at N40.25kobo per share.

The new development is coming barely two months after the investment’s worth is pegged at N30.70 billion.

In 54 days, Abdulsamad’s BUA Industries Limited made N10.57 billion from its insider dealing, according to Ripples Nigeria analysis, as BUA Foods share has appreciated by 53.5% between January 5 till date.

This is despite a closed period that started January 5, which gives only the public – excluding the company’s directors, employees or related parties – access to trade BUA Foods shares.

In a report releases earlier, BUA Foods said: “In compliance with the post listing requirements of the Nigerian Exchange Limited for listed Companies, BUA Foods Plc hereby declares that a closed period for trading in the Company’s shares commenced from January 1st, 2022 in respect of the Unaudited Financial Statements for the Fourth quarter ended December 31st, 2021 and the Company’s Audited Financial Statements for the year ended 31st December, 2021.

“Accordingly, no Director, Manager and other related and interested parties of BUA Foods Plc, privileged to have sensitive information, which may materially affect the price of the securities of the Company, and persons connected to them may directly or indirectly deal in the shares of the Company, until 24 hours after the release of both the Q4 Unaudited Financial Statements and 2021 Audited Financial Statements for the year ended 31st December 2021 to the Nigerian Exchange Limited and the Public,” the statement dated January 25, 2022 said.

According to BUA Foods, “Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties include: Entities over which the company exercises significant influence.”

The Securities and Exchange Commission (SEC) and NGX listing rules had stated that dealing by an insider should be reported to the capital market regulator and authority in 48hours after a trade.

The firm, however, disclosed that its transaction 54 days after the investing public is not known if the SEC and NGX received the report during the required due date, Naija News reports.

According to the capital market authorities, free float is the volume of a company’s share available for the public to purchase, and the listing rules says that quoted firms are required to have 20%.

However, BUA Foods’ free float is 0.17% according to Business Day, which means the control of the company is concentrated at Abdulsamad, giving him substantial influence over the direction of the firm.

The development means buying and selling of shares in a company with free float below 20% is largely done by a small group of investors holding significant influence, and it reflects high volatility for investment, while companies with 20% or above equate low volatility and are more preferred by institutional investors.

Naija News understands that BUA Foods has until January 4, 2023, to comply with the free float requirement, making its latest insider dealing shocking, considering it’s supposed to be freeing up shares, not mopping it up.