At first glance, the idea of a stock split for Seplat Energy seems like a logical step.
With its share price standing at an eye-watering ₦5,700 on the Nigerian Exchange (NGX), many traders believe a split would make the stock more accessible and improve liquidity.
However, sources close to the company suggest otherwise.
Why Seplat Energy Won’t Split Its Shares
Seplat Energy has no plans to carry out a stock split in the near future, despite growing calls from investors on the Nigerian Exchange (NGX).
At ₦5,700 per share, Seplat is the most expensive stock on the NGX, and many believe a split could boost liquidity and attract more investors.
However, sources within the company state that a stock split does not align with Seplat’s corporate objectives.
There are concerns that it could create the perception of reduced intrinsic value, leading to impulsive investor reactions.
A recent example is the VFD Group, which faced confusion after a share split, causing investors to believe the stock had lost value.
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Seplat’s management is particularly cautious about how such a move might be perceived on the London Stock Exchange (LSE), where the company is also listed.
While its NGX share price is ₦5,700, it trades at £200 on the LSE.
A potential 5-for-1 stock split could reduce the price to just £0.40, which management considers too low.
Despite a 150% price increase on the NGX in 2024, Seplat’s primary focus remains on the LSE, where it grew by 60%.
Nigerian investors view Seplat as a hedge against currency volatility, whereas LSE investors see it as a stable dividend-paying firm.
Analysts suggest that maintaining a high share price is crucial for Seplat’s future capital-raising efforts, especially after its recent $800 million acquisition of Mobil Producing Nigeria (MPNU).
For now, the company prioritises stability over market accessibility.
