The Nation Newspaper

Category: Equities

  • CDCSL to launch private equity funds for real estate

    Converged Dynamics Capital Services Limited (CDCSL), a financial services company licensed by the Securities & Exchange Commission (SEC), has started the process of initiating a private equity fund for investments in the Nigerian real estate sector.

    Managing Director, Converged Dynamics Capital Services Limited (CDCSL), Mr. Abiodun Akinniranye, who said this over the weekend, said the company has engaged both foreign and local partners towards the launching of a robust private equity-based fund for Nigerian real estate investment.

    He said the fund, currently under structuring, would serve the dual purpose of accelerating the growth of the Nigerian real estate sector and bridging the country’s housing deficit while simultaneously providing return-minded investors with a gilt-edge instrument to invest their funds.

    According to him, with a huge housing deficit, which stands at roughly 17 million units, there is no way the government or regular banks could provide the required funding to bridge the supply gap.

    “Specialised investment vehicles like structured funds are the viable option for large scale projects in the sector. There are funds out there for the Nigeria market, forget the notion that the international investment community is averse to investing in Nigeria or that our current foreign exchange liquidity challenges are scaring them off. These challenges will reduce and then stabilise.  These funds are long-term instruments with investors looking at exit horizons of seven years and above. They realised that Nigeria continues to be a compelling story and the long-term assessment is that we are a viable investment destination,” Akinniranye said.

    He pointed out that one of the main challenges for the attraction of investments to Nigeria is the lack of appropriately structured financial instruments as investors are interested in the structure of the fund, quality of its investment committee, the service providers and the experience of the fund managers among other details.

    He said CDCSL has the expertise, experience and network to structure appropriate private equity funds for the real estate sector, assuring that the fund will be structured in line with the global best practices and regulatory framework of SEC.

    He added that CDCSL’s structured finance department focuses on raising funds for viable projects through specialized instruments tailored specifically to the dynamics of the project.

    Akinniranye reiterated the commitment of CDCSL to creating various investment funds of different strategies   for the Nigerian financial market with a view to enhancing the capital formation necessary for development of major national priorities such as housing, hospitality, health and power among other general sectoral challenges.

  • Skye Bank shifts AGM over interim audit

    Skye Bank Plc at the weekend postponed its annual general meeting (AGM) earlier scheduled for this Thursday, citing ongoing interim audit of its operations.

    Skye Bank had earlier on September 20, 2016, announced that it would hold its AGM on October 13, 2016. The main agenda of the meeting was the consideration of the annual report and accounts of the bank for the year December 31, 2015.

    “The postponement of the AGM is necessitated by the need to give our external auditors time to complete an interim audit of the bank which is in the final stages,” the bank stated.

    The bank did not indicate the timeline for the AGM, stating that the meeting will be rescheduled at the appropriate time.

    In a statement by the company secretary, Mr Babatunde Osibodu assured stakeholders of its commitment to good governance and prompt disclosures.

    The Central Bank of Nigeria (CBN) had on Monday July 4, 2016 taken over the management of Skye Bank, claiming that the former board and management voluntarily resigned after they failed to turn around the fortunes of the bank.

    The apex bank then appointed Alhaji Muhammad Ahmad, the founding director general of the National Pension Commission (Pencom), as the new chairman and Mr. Tokunbo Abiru, a former commissioner for finance in Lagos state and executive director at First Bank of Nigeria as the new group managing director.

    Ahmad, during a visit to the Exchange, said the reconstitution of the board of the bank by the CBN was not a takeover, but an intervention to correct observed corporate governance issues under the old board.

    While explaining that the ownership of the bank remains in the hands of the shareholders, he said the CBN does not own the bank and has not taken over the bank, stressing that the apex was fully behind the bank and would support it to fully stabilise

    He reassured the bank’s customers and investors that the bank was not distressed but only had corporate governance issues under the old board adding that the bank’s fundamentals remain strong and it remains one of Nigeria’s leading and retail banks.

    In his remarks, Abiru said the management team and the board would work to achieve value enhancement for shareholders, customers and other stakeholders by bringing the cost-income ratio to acceptable levels, improve the risk assets quality and work towards increasing the liquidity and capital adequacy of the bank.

  • GNI confirms acquisition, clarifies status of new investors

    Great Nigeria Insurance (GNI) Plc at the weekend confirmed earlier exclusive reports by The Nation that  a new core investor had acquired 75 per cent majority equity stake in the insurance company.

    The Nation had reported that Insurance Resourcery and Consultancy Services Limited (IRCSL) had acquired 75 per cent equity stake previously held indirectly by Wema Bank in a deal valued at N3.24 billion. A total of 2.87 billion ordinary shares of 50 kobo each of GNI were crossed in a single deal to Insurance Resourcery at N1.13 per share through the negotiated cross deal window of the Nigeria Stock Exchange (NSE).

    At N1.13 per share, the transaction cost represents 126 per cent increase on the current market value of GNI, which has stagnated at its nominal value of 50 kobo per share. GNI currently has total paid up capital of 3.827 billion ordinary shares of 50 kobo each with a market capitalisation of N1.91 billion.

    In a regulatory filing at the weekend, which confirmed the conclusion of the acquisition, GNI clarified that IRCSL is a special purpose vehicle representing a consortium of investors. The insurance firm did not however disclose the identities of the new investors.

    GNI said the transaction value underscores its inherent value citing the company’s attractive real estate portfolio, debt-free balance sheet and long history as one of Nigeria’s oldest insurance companies.

    Managing Director, Great Nigeria Insurance (GNI) Plc, said the conclusion of the acquisition would enable the company to focus on further unlocking its vast potential with a view to delivering better returns to shareholders.

    According to her, the directors of the company would focus on consolidation of its market share in identified niche markets, excellent customer service, prompt claims payment and aggressive investment income to in the overall strategy to improve the company’s performance and increase shareholders’ return.

    Apparently referring to its inability to meet the 20 per cent free float for its category of listing on the NSE, GNI stated that IRCSL was committed to maintaining the listing of the company on the Exchange, adding that there are ongoing discussions with appropriate regulatory authorities.

    A report by the Exchange indicated that GNI currently has 16 per cent of its issued shares in the hands of the general investing public as against the minimum requirement of 20 per cent for its category of listing.

    Following Central Bank of Nigeria (CBN)’s banking regulatory regime that required banks to either divest from non-core banking subsidiaries or form a holding company to hold those subsidiaries, Wema Bank had opted to divest from its non-core banking businesses including GNI. The bank had since divested from Wema Insurance Brokers Limited, Wema Registrars Limited, Independent Securities Limited and Whyte Cleon Limited. It also integrated operations of four subsidiaries into its core banking business including Wema Asset Management Limited, Wema Securities and Finance Plc, Wema Homes (Savings and Loans) Limited and Wise Properties Limited. Wema Bank had 100 per cent equity stakes in the trio of Wema Registrars, Wema Insurance Brokers and Whyte Cleon Limited while it had 94.7 per cent stake in Independent Securities and 75 per cent in GNI.

  • Livestock Feeds to raise N1.1b new equity funds from shareholders

    Livestock Feeds Plc has received the approval of the Nigerian Stock Exchange (NSE) to raise about N1.1 billion new equity funds from existing shareholders. The proposed supplementary issue of the agro-allied company was approved by the quotation committee of the Exchange last Thursday.

    A regulatory document obtained at the weekend by The Nation indicated that Livestock Feeds plans to undertake a rights issue of 1.0 billion ordinary shares of 50 kobo each at a price of N1.10 per share. The rights issue will be pre-allotted on the basis of one new ordinary share for two ordinary shares already held by the shareholder.

    The rights issue’s price of N1.10 per share represents about 28 per cent increase on the current market value of 86 kobo at the Exchange, raising fears about the attractiveness of the rights issue to the retail shareholders.

    More than half of the rights issue’s funds are expected to be provided by UACN of Nigeria (UACN), which acquired majority equity stake in the agro-allied company in 2013. Recent shareholding analysis showed that UACN holds 51.01 per cent equity stake in Livestock Feeds while First Capital Trust Limited holds the second largest equity stake of 8.02 per cent. Cashcraft Asset Management Limited holds the third largest stake of 5.06 per cent. Sundry minority shareholders hold the balance of 35.9 per cent equity stake.

    Market pundits, however, said the rights issue may provide a window for UACN to restructure the share capital of Livestock Feeds to allow for injection of additional funds and technical competence into the operations of the company.

    Chairman, UAC of Nigeria (UACN) Plc, Mr. Dan Agbor, had told shareholders at the annual general meeting in June that the group decided to retain the larger part of its net earnings in 2015 to ensure that it remained in a position to participate in new equity issues that might be launched by its subsidiaries.

    According to him, the board had recommended total dividend of N1.92 billion for the 2015 business year while being mindful of the need to conserve funds so that the group could participate in the rights issues to be undertaken by three of its subsidiaries, including UACN Property Development Company Plc, Livestock Feeds Plc and Portland Paints & Products Nigeria Plc.

    Incorporated as a limited liability company in March 1963, Livestock Feeds converted to a public limited liability company and was quoted on the Nigerian Stock Exchange (NSE) in 1978.

  • Equities rally as MSCI retains Nigeria in global equities indexes

    Equities rally as MSCI retains Nigeria in global equities indexes

    MSCI, the global provider of research-based indexes and analytics, has decided to continue to retain Nigeria in its benchmark indexes for frontier markets in acknowledgment of government efforts at easing access to foreign exchange (forex) and improving liquidity in the market.

    But the MSCI added the MSCI Nigeria Indexes to the review list for potential reclassification to standalone status as part of the 2017 annual market classification review. Results of annual market classification reviews are usually announced in June.

    Also, MSCI stated that it would continue to apply the special treatment on Nigeria announced on April 29, 2016 until further notice. With this, MSCI will not implement selected changes for any securities classified in Nigeria in the MSCI Nigeria Indexes or indexes which Nigeria is a component of including the MSCI Factor, Thematic, ESG or other derived indexes as part of the upcoming index reviews as well as corporate event treatments.

    Nigerian equities appeared to heave a sigh of relief yesterday and broke a two-day downtrend at the Nigerian Stock Exchange (NSE) with a gain of N4 billion. Aggregate market value of all quoted equities on the NSE rode on the back of widespread gains to close at N9.703 trillion as against its opening value of N9.699 trillion. With 25 gainers to 18 losers, the benchmark index of the Nigerian stock market, the All Share Index (ASI), inched up from 28,236.23 points to close at 28,247.56 points. Foreign investors, who use the global indexes as indicators, account for more than one-thirds of turnover at the Nigerian stock market.

    In a statement issued at the conclusion of its consultation on the potential market reclassification for the MSCI Nigeria Indexes, the global analytics firm noted the positive efforts by the Nigerian authorities and the Central Bank of Nigeria to enhance the liquidity in the foreign exchange market through a number of initiatives, such as the adoption of a more flexible exchange rate. It however pointed out that the situation still remains challenging and it will continue to monitor and welcome feedback on the level of accessibility in Nigeria.

    “The consultation discussions revealed that despite low level of accessibility of the Nigerian market, the investment community recognizes that more time may be needed for Nigerian authorities to improve liquidity of the foreign exchange market. Hence, MSCI will actively monitor the developments on the Nigerian market over the following months and reassess the market classification of the MSCI Nigeria Index as part of the 2017 Annual Market Classification Review,” MSCI stated.

    MSCI however warned that introduction of restrictive measures, such as capital or foreign exchange controls, which can lead to material deterioration of equity market accessibility, may result in the exclusion of the Nigerian market from the MSCI Frontier Markets Indexes and a reclassification to standalone status.

  • Nigeria’s investment horizon improving, says Exotix Partners

    Nigeria’s investment horizon improving, says Exotix Partners

    A major global investment and finance firm, Exotix Partners, has said recent changes in Nigerian fiscal and monetary policies have brightened the prospects of Nigerian investment markets. In a new review of the Nigerian economy titled “It’s time for a re-appraisal”, Exotix noted that some analysts and pundits might have allowed the previous sentiments to blur their analytical edge to fail to see the improving dynamics of the Nigerian economy and investment space.

    Exotix is a major global finance and investment company with considerable imprints in world and Africa’s commercial centres. It coordinates its global operations through five major offices in London, New York, Lagos, Dubai and Nairobi.

    “Negativity on Nigeria appears to have no end. Six months ago, it was all about the failures of a misguided foreign exchange policy; now the narrative has moved on to the Niger Delta Avengers, the onset of recession, the poor state of Federal Government of Nigeria finances and any number of other concerns. Is it possible that investors have adopted a permanently negative bias on Nigeria?” Exotix rhetorically asked in the review.

    According to the sovereign research report, Nigeria’s adjustment is progressing better than previously thought with the exchange rate now trading below its fair value on an REER basis even when N315/$ was used instead of N340-350/$; inflation has peaked in underlying terms and oil production is likely to have bottomed.

    “While we are not under any illusions about the problems facing the market, we think expectations  about  the  path  of  the  foreign exchange rate –and  the  economy  as  whole –have become  unrealistically  negative.  If  anything,  with  the  potential  for  a  rebound  in  both the  oil  price, thanks  to  OPEC action,  and  production, thanks  to  a  deal  with  the Avengers, we would argue that the balance of risk has actually been shifting in favour of  the  upside.  However,  the  standard  investor  bias  has  become  so  negative,  in  our view, that they are unwilling to recognise the potential for an improvement,” Exotix stated.

    The report noted that the changes in Nigeria’s forex regime, although very late, moved it closer to a market-determined free-float than Nigeria has ever been, and will continue to move in that direction.

    “One of the least well-covered aspects of Nigeria’s adjustment is the turnaround in the external accounts. To most experienced Nigeria observers, the biggest surprise is the reversal in the net errors and omissions component of the BoP, responsible for inflows of $26 billion over the past four quarters. We think this reflects a combination of factors including: the rise of informal, non-oil exports which received a boost from the devaluation; the repatriation of savings from abroad, via the black market; an increase in unrecorded remittances; and the rise of informal or stolen oil exports. Not only do these inflows reduce Nigeria’s external funding needs, but they support the impression of an adjustment that has been underway for much longer than the market assumes,” Exotix stated.

    The report pointed out that the extraordinary measures taken in order to attract capital have important implications for the investment landscape noting that in contrast to the recovery in 2009, when the policy response was centred around a large handout to the household sector through higher public sector wages, the approach in 2016 involves a similarly large transfer to banks in form of high yields on government paper, negative real interest rates on deposits, lucrative trading businesses in forex and attractive spreads on special on-lending facilities provided by the Central Bank of Nigeria (CBN).

    Exotix also noted that for all the attention lavished on the problems facing government, its role in any economic recovery should be de-emphasised as the footprint of the Nigerian state relative to the overall economy has been in decline since at least 2009.

    “On GDP/capita of $2,743 in 2015, it collected $117 per head in taxes and invested just $17. Even if public sector capital expenditures were doubled from current levels, we doubt the impact on overall growth would be significant. Any recovery would, by necessity, be investment-driven and private sector dependent,” Exotix pointed out.

  • Stanbic IBTC opens public subscription to N2.5b funds

    Stanbic IBTC Asset Management Limited (SIAML), the investment management arm of Stanbic IBTC Holdings Plc, has opened application lists for subscription to two newest mutual funds-Stanbic IBTC Dollar Fund (SIDF) and SIAML Pension ETF 40. The opening of public subscription followed the approval of the funds by the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE).

    The initial public offerings (IPOs) for units of both funds will close on Wednesday, November 2, 2016. Under the SIDF, SIAML is offering 5.0 million units of the Stanbic IBTC Dollar Fund (SIDF) at $1 per unit. This brings the offer size to N1.52 billion at current exchange rate of N305/$. Under the SIAML Pension ETF 40, the firm is offering 10 million units at N100 at par value of N100.

    The SIAML Pension ETF 40 is an Exchange Traded Fund (ETF) that will mirror the Nigerian Stock Exchange Pension 40 Index, launched last year by the NSE to track returns for investors, particularly institutional investors like Pension Fund Administrators (PFAs), that invest in line with guidelines set out by the National Pension Commission. The NSE Pension 40 Index monitors the top 40 most capitalised and liquid companies in the market.

    Chief Executive Officer, Stanbic IBTC Asset Management Limited (SIAML), Bunmi Dayo-Olagunju, said the Stanbic IBTC Dollar Fund provides retail and institutional investors the opportunity to seek exposure in attractive dollar-denominated securities to serve as a devaluation hedge as well as optimise returns on investments.

    She said the Stanbic IBTC Dollar Fund was launched based on the need to spur the preservation and appreciation of wealth.

    “We believe that even in these volatile times, the Fund will foster the diversification of portfolios and investments in currency terms, which in turn will help in the preservation and appreciation of wealth for investors,” Dayo-Olagunju said.

    She outlined that the primary objective of the SIAML Pension ETF 40 is to provide investors access to the most liquid publicly quoted companies on the NSE that are compliant with the regulatory requirements for investing pension assets in terms of taxable profits, free float, dividend, sector and individual stock weighting.

    She highlighted some of the benefits of the ETF to include provision of investors with strategic exposure to the equities market, allowing for flexibility, cost effectiveness, diversification of investment, as well as liquidity.

    She added that it would act as a benchmark for PFAs to measure performance and report same to Retirement Savings Account (RSA) holders.

    She assured that her firm would continue to leverage its expertise in asset and wealth management, built over the past 20 years, as well as the Stanbic IBTC Group’s rich heritage in corporate and investment banking to provide quality products and services that will not only deepen the market, but enhance transparency and investor’s confidence.

    Chief Executive Officer, Stanbic IBTC Capital Limited, Mr. Funso Akere commended SIAML for its efforts in deepening the Nigerian capital market through the introduction of new and innovative products with specific characteristics to meet the needs of various market categories.

  • High-cap stocks start equities on marginal gain

    Nigerian equities reopened yesterday with a modest gain of N6 billion as gains by highly capitalised stocks overshadowed widespread losses induced by profit-taking transactions. The two main indices at the Nigerian Stock Exchange (NSE) average day-on-day gain of 0.06 per cent, in a modest recovery sustained by highly capitalised stocks in the industrial goods, banking and oil and gas sectors.

    Aggregate market value of all quoted equities on the NSE rose from N9.703 trillion to close at N9.709 trillion. The All Share Index (ASI), the main index that tracks prices at the Exchange, also inched up from 28,247.07 points to close at 28,263.16 points.

    With 23 losers to 16 gainers, the modest gain was driven by gains recorded by some highly capitalised stocks. Group and sectoral indices showed mixed performances. The NSE Consumer Goods Index appreciated by 0.4 per cent. The NSE Insurance Index inched up by 0.2 per cent. On the flipside, the NSE Banking Index declined by 0.3 per cent.

    Total Nigeria led the gainers with a gain of N4.25 to close at N299.25. Nigerian Breweries rose by N1.48 to close at N145. Flour Mills of Nigeria gathered N1 to close at N21.04. Cadbury Nigeria added 78 kobo to close at N16.53. Dangote Cement rose by 47 kobo to close at N182.50.

    Ecobank Transnational Incorporated rose by 14 kobo to close at N11.50. Dangote Flour Mills inched up 13 kobo to close at N3.86 while FBN Holdings and Champions Breweries added 10 kobo each to close at N3.20 and N2.60 respectively.

    Total turnover stood at 249.76 million shares valued at N1.96 billion in 3,170 deals. The most active stock was Fidelity Bank with 52.01 million shares valued at N46.81 million. Diamond Bank followed with 28.33 million shares worth N34 million while Access Bank placed third with 28.23 million shares worth N156.71 million.

    On the negative side, Seven-Up Bottling Company recorded the highest loss of N5.45 to close at N144.55. Conoil followed with a loss of N3.50 to close at N39. Beta Glass declined by N3.39 to close at N31.51. Forte Oil dropped by N2.11 to close at N161 while Oando lost 29 kobo to close at N5.59 per share.

    “Market performance has remained dictated by short term momentum trading in the absence of noteworthy sentiment drivers. Hence, we expect sentiment to remain broadly soft for the week as profit-taking may persist in subsequent sessions,” analysts at Afrinvest Securities stated.

  • Dangote Cement drags equities to N17b loss

    Dangote Cement drags equities to N17b loss

    The Nigerian stock market suffered a relapse yesterday as the decline in share price of the highly influential Dangote Cement Plc dragged the equities market to a net capital loss of N17 billion.

    While the overall pricing trend remained tight amidst continuing rally in the oil and gas sector, losses recorded by Dangote Cement overwhelmed the modest positive pricing trend that had shaped the market in the previous two trading days.

    Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) dropped from its opening value of N9.692 trillion to close at N9.675 trillion. The All Share Index (ASI), the common value-based index that tracks prices of quoted equities, declined by 0.17 per cent from 28,214.57 points to close at 28,166.42 points. Average year-to-date return now stands at -1.66 per cent.

    Dangote Cement, Nigeria’s most capitalised quoted company, controls nearly one-third of total market capitalisation of the Nigerian equities’ market. Dangote Cement’s share price dropped by N3 or 1.64 per cent to close yesterday at N180, orchestrating a general negative market position. Guaranty Trust Bank, Nigeria’s most capitalised banking stock, followed Dangote Cement with a loss of 94 kobo to close at N25.83. Guinness Nigeria followed with a loss of 23 kobo to close at N92.77. Nigerian Aviation Handling Company declined by 16 kobo to close at N3.32 while Ecobank Transnational Incorporated dropped by 12 kobo to close at N11.38 per share.

    Total turnover stood at 410.10 million shares valued at N3.62 billion in 4,179 deals. Banking stocks dominated top activities’ chart. The three most active stocks included Diamond Bank, with 141.36 million shares; FCMB Group, 48.10 million shares and FBN Holdings, with 40.76 million shares.

    On the positive side, downstream oil majors continued to lead the gainers. Total Nigeria led the 18-stock gainers’ list with a gain of N13.50 to close at N283.50. Mobil Oil Nigeria followed with a gain of N8.55 to close at N179.55. Forte Oil rose by N7.76 to close at N163.11. Nigerian Breweries gathered N1.46 to close at N143.50 while PZ Cussons Nigeria rose by 94 kobo to close at N19.90 per share.

    “Whilst a tight monetary policy environment prevails, we perceive frail sentiment towards equities may persist as investors continue to take advantage of higher yields in the fixed income market,” analysts at Afrinvest Securities stated.

     

  • Guinness Nigeria loses N2b as consumer spending declines

    Guinness Nigeria Plc recorded a net loss of N2 billion in the immediate past year as the brewing multinational struggled with declining sales amidst dwindling consumer spending and tough macroeconomic situation.

    Key extracts of the audited report and accounts of Guinness Nigeria for the year ended June 30, 2016 released yesterday showed that turnover dropped by 14 per cent from N118.5 billion in 2015 to N101.97 billion in 2016. Operating profit declined by 72 per cent from N15.67 billion to N4.42 billion. The company recorded a pre-tax loss of N2.35 billion in 2016 as against profit before tax of N10.8 billion in 2015. After taxes, net loss stood at N2.02 billion in 2016 compared with net profit of N7.790 billion in 2015.

    The board of directors of the company meanwhile has decided to dip into the reserves of the company to pay a dividend per share of 50 kobo for the 2016 business year, 84 per cent below N3.20 paid for the 2015 business year. The company will distribute N752.94 million as gross dividend for 2016 compared with N4.82 billion distributed in 2015.

    With its first loss in three decades, the company blamed the decline on the tough macroeconomic situation and the spiral effects of the devaluation of the Naira.

    Managing Director, Guinness Nigeria Plc, Peter Ndegwa said the company was constrained by the combination of a tough economic environment and challenges with naira devaluation.

    Our performance this year was impacted by two major factors, one being the very tough economic challenges around consumer spending, driving consumer preferences towards value brands across the sector, the other, and more significant factor being the effect of foreign exchange policy and the devaluation of the Naira. When you take out the impact of the latter, our underlying performance for the year was broadly in line with the prior year in spite of the pressure on the top line,” Ndegwa.

    Chairman, Guinness Nigeria Plc, Mr Babatunde Savage, however noted that in spite of the continuing deterioration in the operating environment, the company’s core brands of Guinness Stout and Malta Guinness are in growth.

    He added that the company also has a strong participation in the growing value segment of the market through Satzenbrau and Dubic.

    “We have also started to see early signs that our decisions to acquire the distribution rights in Nigeria to the International Premium Spirits brands of Diageo and to invest in local capacity for spirits manufacturing are the right ones for the business,” Savage said.