Category: Equities

By Taofik Salako, Deputy Group Business Editor

 

Custodian Investment Plc has completed acquisition of the 51 per cent majority equity stake in UACN Property Development Company (UPDC) Plc from UAC of Nigeria (UACN) Plc.

Custodian Investment and UACN had signed a binding agreement on the divestment of UACN’s 51 per cent majority equity stake in UPDC to Custodian Investment. The transaction included sale of 9.47 billion ordinary shares of UPDC held by UACN, representing 51 per cent of UPDC’s issued share capital to Custodian.

Under the agreement, the shares sale will be transferred in two tranches with initial sale of 946.56 million shares, representing 5.10 per cent of the issued share capital of UPDC, on execution of binding transaction agreements. Then, subsequent sale of 8.52 billion shares, representing 45.90 per cent of the issued share capital of UPDC upon receipt of requisite approvals.

Regulatory documents indicated that the second tranche of 8.52 billion ordinary shares of 50 kobo each, representing 45.90 per cent, had been transferred to Custodian Investment, concluding the 51 per cent divestment deal.

UACN had earlier in the first tranche transferred 946.56 million ordinary shares of 50 kobo each or 5.10 per cent equity stake to Custodian Investment.

The cross deals for the transfers were done as off- market deals through the negotiated trade window of the Nigerian Stock Exchange (NSE).

The transfer placed the divestment on a fast-track and market analysts expected the divestment to be concluded within this year.

Both parties to the transaction had commended the partnership between Custodian and UACN, noting that the deal would achieve both companies’ respective objectives in the real estate industry. It was also described as a significant milestone that aligned with UACN’s strategy to focus on its core businesses.

Group Managing Director, Custodian Investment, Wole Oshin said Custodian was excited about the possibilities arising from the partnership with UAC which provides multiple levers for value creation.

He said the rationale for the transaction was that Custodian and UAC share the view that their ambitions for capturing opportunity in the real estate industry will be better achieved working in partnership.

“UPDC is one of Nigeria’s leading real estate development companies, having completed several landmark residential and commercial developments over the past twenty years. This transaction will provide Custodian with a platform to capture arising real estate opportunities. It also immediately provides recurring cash flow visibility and attractive yields as a result of its direct exposure to Nigeria’s leading real estate investment trust (UPDC REIT) with a track record of profitability and annual dividend distribution which offers a good compliment for our product portfolio,” Oshin said.

He expressed confidence that the recent recapitalisation of UPDC, significant reduction in finance costs, and recently reconstituted leadership have repositioned the company to operate sustainably and capture growth opportunities aimed at increasing stakeholder value going forward.

Group Managing Director, UAC of Nigeria (UACN) Plc, Folasope Aiyesimoju said the transaction was a significant step in achieving the group’s objectives for UPDC, noting that in 2018, the board and management of UACN embarked on a strategic review to evaluate the performance of the company and its subsidiaries.

According to him, UACN’s objective was to achieve sustainable positive financial performance from existing operations and enable management focus on businesses that align with its strategy. In reviewing UPDC, the board weighed the long-term opportunities in the Nigerian real estate sector against the fundamental differences between the cash flow profile and capital needs of UPDC and those of the other entities in UACN’s portfolio. Following its review, the board concluded that it would be in the best interest of UACN to exit its interest in the real estate sector, allowing UPDC to operate as a standalone legal entity, free to source appropriately structured capital and to unlock value for its shareholders.

In September 2019, the boards of directors of UACN and UPDC jointly announced three significant strategic initiatives aimed at strengthening UPDC and positioning the company to operate as a standalone entity. This included a rights issue to recapitalise the business, plans for UACN to transfer UACN’s equity interest in UPDC pro-rata to UAC’s shareholders (UPDC unbundling), and plans for UPDC to unbundle the UPDC REIT to its shareholders (UPDC REIT unbundling). The N16 billion UPDC rights issue was successfully completed in April 2020, proceeds of which were used to reduce borrowing costs and significantly improve UPDC’s capital position.

“In the process of progressing the unbundling initiatives, UACN received a credible offer from Custodian. The terms of the offer compelled the board to re-evaluate the planned approach to deconsolidate UPDC and influenced the board’s decision to proceed with the sale of a portion of UACN’s interest in UPDC to Custodian, effectively putting an end to the UPDC unbundling. We are delighted about the positive impact that a strong anchor shareholder like Custodian will have on UPDC and are focused on ensuring a smooth transition,” Aiyesimoju said.

 

Cordial Exchange has launched a platform for a safe and reliable exchange for cryptocurrency with a promise to provide outstanding exchange rates.

Cordial Exchange is a licensed Nigerian firm that enables the buying and selling of bitcoin, gift cards, and convenient exchange of foreign currencies with customers who have payoneer and perfect money wallets.

Speaking at an interactive session during the launch, Business Manager, Cordial Exchange, David Adeleke, said the firm was excited to come on board to fill in the gaps in the modus operandi of the cryptocurrency business and management in Africa.

According to him, Cordial exchange is here to enlighten everyone and help them see cryptocurrency as less of a foreign concept.

He affirmed confidence in the Cordial Exchange brand noting that its trendy platform also serves as a hub for clients to receive every relevant information and concept they feel they might lack with respect to owning and exploring bitcoin amongst other services.

“When you visit the website, www.cordialexchange.com, the first word you see is ‘WOW’ we say that with so much confidence because we know what we offer to the public; our exchange rate, customer support system, security and speed at delivery are second to none. We have flexible wallets in place ready for all our users for easy transaction, and an all-round customer support system that will assist them if they need assistance,” Adeleke said.

According to him, in current trends of the cryptocurrency trading, bitcoin is not only an edge against asset inflation but also serves as the first true and possibly dominant digital monetary network.

He said Cordial Exchange is preferable cryptocurrency platform that is here to stay as it has identified itself to be more than a brand, but creators of opportunities, and problem solvers.

Union Bank of Nigeria (UBN) Plc recorded modest growths across key performance indices with gross earnings rising by six per cent to N118.8 billion.

Key extracts of the nine-month report for the period ended September 30, 2020 showed that gross earnings rose from N111.9 billion recorded in third quarter 2019 to N118.8 billion in third quarter 2020. Interest income had inched up from N84.9 billion to N85.4 billion. Net interest income before impairment rose by 15 per cent to N41.7 billion as against N36.4 billion in third quarter 2019, driven by increase in earnings assets and lower interest expense.

The report also showed that non-interest income rose by 23 per cent from N27.1 billion to N33.4 billion, driven largely by increased trading income and asset revaluation gains. Net operating income inched up from N68.7 billion to N69.3 billion. Operating expenses was flat at N53.4 billion in 2020 as against N53.2 billion in 2019. Profit before tax inched up by two per cent from N15.5 billion to N15.9 billion.

The balance sheet showed that gross loans rose by 14 per cent to N678 billion by September 2020 from N595.3 billion in December 2019, which the bank attributed to the impact of its targeted lending to the real sector. Customer deposits also increased by 28 per cent to N1.1 trillion by September 2020 as against N886.3 billion in December 2019. The bank attributed the increase in customers deposit to gains on its investments in customer-led products and digital channels which resulted in the acquisition of over 600K new-to-bank customers and deepening of wallet share of existing customers.

Chief Executive Officer, Union Bank of Nigeria (UBN) Plc, Mr. Emeka Emuwa, said the results reflected increasing customer loyalty amid intense retail drive.

According to him, the bank’s customer acquisition strategy has been reinforced by the versatility of its digital platforms and channels which continue to drive customer satisfaction.

While acknowledging cautious extension of credit to the real sector, he said the bank would continue to explore bankable lending opportunities in the Nigerian economy guided by its robust risk management practices.

“The civil unrest which erupted in October and led to significant destruction of property and small businesses across the country, will have real impact on business and the operating environment; and even as restrictions have eased, Covid-19 also remains a present threat in our day to day operations.

“Heading into the final stretch in 2020, our overarching commitment is to the health and wellbeing of our employees and the safety of our customers. Showing up for our communities is also at the core of who we are and therefore we will work with our partners and through our corporate citizenship initiatives to support individuals, businesses and our communities where we operate as we begin to rebuild and heal as a country,” Emuwa said.

Chief Financial Officer, Union Bank of Nigeria (UBN) Plc, Joe Mbulu noted that the bank’s asset quality has continued to improve with non-performing loans (NPLs) down to 3.6 per cent from 5.8 per cent as at December 2019, supported by ongoing efforts to diversify loan book to include viable businesses and households.

“Our Capital Adequacy Ratio remains robust at 19.5 per cent, well above the regulatory threshold. With the $40 million financing secured from the International Finance Corporation for on-lending to trade finance customers, we are continuing to expand our funding engagements with DFIs to support our strategic business initiatives.

“For the rest of the year, we remain focused on our business priorities in the face of the Covid-19 challenge and will continue to leverage increasing customer loyalty, stronger digital platforms and channels as well as solid risk management structure to deliver on our objectives,” Mbulu said.

 

By Taofik Salako, Deputy Group Business Editor

 

Members of the Nigerian Stock Exchange (NSE) yesterday voted for the listing of the Exchange after its conversion to a public limited liability company.

At the 59th annual general meeting (AGM), which is expected to be the last before the conversion to a shareholders-owned company, members of the NSE overwhelmingly voted for the listing of the Nigerian Exchange Group Plc (NGXG) on the Nigerian Exchange Limited (NGX) once the demutualisation of the NSE is completed.

Under the resolution passed by the AGM, subject to the receipt of requisite approvals of relevant regulatory authorities, following the conversion and re-registration of NGXG, the group is authorised to undertake a listing by introduction of its shares on NGX. Consequently, the NSE will no longer be wholly owned by its dealing and non-dealing members.

Also, following the conversion and re-registration of the Exchange as Nigerian Exchange Group Plc, the powers of the National Council of the Exchange will be devolved upon the board of directors of the group. Otunba Abimbola Ogunbanjo was also re-elected as a member of the National Council of NSE.

President, Nigerian Stock Exchange (NSE), Otunba Abimbola Ogunbanjo said yesterday’s resolution cleared the way for the listing of NGXG and for a new structure that would enable the Exchange to realise its vision of becoming Africa’s leading exchange hub.

According to him, NGXG Plc will be expected to realise all the benefits of demutualisation for its stakeholders and the capital market at large.

“The National Council welcomes the strong endorsement by the members of the Exchange for our listing plans. On behalf of the Council we wish to thank the Exchange’s management for their outstanding work in the previous year, when they have faced unprecedented challenges such as the Coronavirus pandemic. It is a tribute to their efforts that the Exchange has continued to work effectively and at the same time has made significant progress in pursuing its strategic development through listing and other steps,” Ogunbanjo said.

Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, commended members of the Exchange for their overwhelming support for the listing plans.

He said the resolution marked the beginning of the Exchange’s transformation into a listed company with flexibility to raise additional equity and debt capital.

“It is our aim that under this new structure, the Nigerian capital markets will be able to play a role that is commensurate with Nigeria’s status as Africa’s biggest economy. We believe we can become a financial hub for Africa and with the backing of our stakeholders and their continued use of our services this objective can become a reality,” Onyema, who  is the Group CEO Designate of NGXG Plc, said.

According to the plan, the emergent holding group, Nigerian Exchange Group Plc, will list its entire issued share capital of 2.0 billion ordinary shares of 50 kobo each by way of introduction on the Nigerian Exchange Limited, which will take over the trading function currently being done by the NSE.

Under the rules at the Exchange, immediate post-demutualisation shareholders of the emergent holding group may need to make initial shares available to create liquidity in the stock. Listing by introduction is a listing method for companies that desire to list its primary share capital on the Exchange, without prior public issuance.

The Nation had reported exclusively that government’s corporate regulatory agencies were in the process of final approval for the conversion, otherwise known as demutualisation. The Federal High Court (FHC) had in May 2020 sanctioned the scheme of arrangement for the conversion after shareholders at a court-ordered meeting and extraordinary general meeting in March 2020 approved the scheme of arrangement and major changes in the organisational structures of the post-demutualisation NSE.

Under the approved scheme of arrangement, the NSE will transit into a holding company, Nigerian Exchange Group (NEG) Plc, which will be the parent company for the Nigerian Exchange Limited, the successor that will carry on the securities trading business of the Exchange, and other subsidiaries. Shareholders will own shares in NEG Plc while NEG will own the main company and other subsidiaries.

According to the scheme of arrangement for the conversion, the post-demutualisation shareholders’ base will consist of 255 institutional shareholders and 177 individual shareholders. The post-demutualisation shareholding arrangement was arrived at by converting the existing dealing members of the Exchange to institutional shareholders and ordinary members to individual shareholders.

Shareholdings will be on equal basis in the immediate conversion period with each institutional shareholder holding 6.01 million ordinary shares of 50 kobo each while each individual shareholder will hold 2.44 million ordinary shares of 50 kobo each.

Thus, each institutional shareholder will hold 0.3 per cent equity stake while each individual shareholder will hold 0.1 per cent equity stake, in line with the current membership-share conversion ratio of 78 per cent for dealing members and 22 per cent for ordinary members.

The NSE will transit into a non-operating holding company with an authorised share capital of 2.5 billion ordinary shares. About 2.0 billion ordinary shares of 50 kobo each are expected to be issued in the immediate period of the conversion.

The NSE will transfer its securities  exchange  licence and other assets necessarily required to carry out the securities exchange function; which will   include human   resources,   securities   exchange   function related contracts, the  trading facilities  comprising of the  trading floors, work stations, telephones and other office equipment such as cabinets and others, quotation board,  stock  price  electronic  display  device,  stock  printers,  inquiry display equipment and other assets to Nigerian Exchange Limited pursuant to the scheme.

According to the scheme, the demutualised NEG will take off with authorised share capital of N1.25 billion comprising of 2.50 billion ordinary shares of 50 kobo each, which will be registered with the Corporate Affairs Commission. The NEG will subsequently set aside 2.0 billion ordinary shares of 50 kobo each as issued share capital, which will be registered with the SEC.

A total of 40.08 million ordinary shares, representing 2.0 per cent of the proposed issued shares of NEG will be set aside for allotment to parties that may lay claims to entitlement to shares in the demutualised Exchange. This was pursuant to the provisions of the Demutualisation Act 2018. The apportionment of 2.0 per cent as the claims review shares is based on an analysis of the probable quantum of shares that would be required to settle each claim. However, each claimant will be expected to provide irrefutable evidence of membership or circumstance that confers such claim of ownership.

However, in the event the claims review shares are insufficient to satisfy successful claims, additional shares will be allotted from the demutualised Exchange’s authorised share capital.

A total of 1.96 billion ordinary shares, representing 98 per cent of the issued shares, the balance of the issued shares following the reservation of the claims review shares, will be apportioned between dealing and ordinary members on the basis of a ratio of 78:22, respectively.

With the approval of the scheme, all assets, liabilities and undertakings including real property and intellectual property rights of the NSE- with the exception of the securities exchange licence and all assets and appurtenances in relation to the securities trading business of the NSE – shall be retained by NEG.

The NSE will set up a separate company, NGX Regulation Limited (NGX Regulation) that will be charged with the regulatory functions of the Exchange after demutualisation pursuant to an arm’s length agreement. This is in order to safeguard the neutrality of the regulatory system.

With demutualisation, the Memorandum and Articles of Association of the re-registered Exchange will be amended to indicate the new name, NEG, the authorised share capital and all requisite provisions for a public company limited by shares.