Caverton stock loses N29bn since listing in 2014

Stock price of Caverton Offshore Support Group Plc has recorded a 90.52 per cent drop in value since it was quoted on the floor of the Nigerian Stock Exchange (NSE) in May 20, 2014, costing shareholders of the company about N28.814 billion of their wealth during the period under review.

Caverton Offshore Group, a leading oil and gas service firm providing marine and aviation logistics, had increased market capitalisation at the NSE by N31.829 billion ($198 million) in 2014.

But at the close of trading last Friday, the company’s market capitalsation had depreciated by 90.52 per cent or N28.814 billion to close at N3.015 billion.

 Investigation also showed that Caverton, which was listed on the support and logistics sub-sector of services sector and also currently occupies the first position in term of share price in the sub-sector, closed last Friday at 90 kobo per share as against N9.50 per share at which it was admitted for trading in 2014, hence accounting also for a drop of 90.52 per cent.

The management of NSE had listed by introduction, a total of 3.35 billion ordinary shares of 50 kobo at N9.50 per share of Caverton Offshore Support Group Plc, valued at N31.829 billion.

Chief Executive Officer of the NSE, Oscar Onyema, said the listing was another manifestation that the Nigeria bourse is on the right path of becoming the African exchange of choice.

Onyema noted that Caverton has taken a bold step by adding N31.829 billion to the market capitalisation of the exchange Managing Director of the company, Mr. Olabode Makanjuola, had while addressing capital market community on the floor of the Nigerian Stock Exchange at the listing said the company has metamorphosed from a humble beginning to a leader in the off-shores service industry over the past 14 years.

He noted that the demand for capital expansion lured the company to list on the floor of the exchange, as the company intends to leverage on the platform to expand its capital base.

“Our plan is to be the African champion and the leader of offshore support services company in the continent. We know we have the wherewithal because of the favourable legislation as regards the local content initiative of the Federal Government, which has come to stay,” he said.

However, investor sentiment for equities was dragged by weaker macroeconomic indicators, which stifled corporate earnings expectations and increased appetite for debt securities.

Consequently, Caverton had emerged second worst performing stock in 2016 in percentage terms, having dropped by 63.56 per cent during the year after Forte Oil Plc, which emerged the worst performing stock with a drop of 74.42 per cent.

According to reports, statistics obtained from the NSE for the period showed Forte Oil stock, which in 2016 was worth N330, depreciated by 74.42 per cent to close the trading year at N84.43 per share.

Caverton shed 63.56 per cent to close at 90 kobo against N2.47, while Diamond Bank lost 61.74 per cent to close at 88 kobo in contrast with the year’s opening price of N2.30 per share.

He added that Caverton’s weak earnings and narrow business model affected the company’s price movement, noting that dwindling earnings on increasing nonperforming loan affected Diamond Bank shares.