The Nation Newspaper

Category: Equities

  • Verod Capital stakes N5.3b bid on Law Union acquisition

    Verod Capital stakes N5.3b bid on Law Union acquisition

    By Taofik Salako, Capital Market Editor

    Anglophone West Africa private equity firm, Verod Capital Management has offered N5.3 billion for the acquisition of the entire share capital of Law Union and Rock Insurance Plc in a major bid that signals the opening up of mergers and acquisitions in the Nigerian insurance industry.

    The board of Law Union at the weekend confirmed that it had received a binding offer from Verod Capital seeking to acquire the entire 4.296 billion ordinary shares of 50 kobo each of Law Union at N1.23 per share.

    The offer thus valued Law Union at N5.28 billion, 36.4 per cent above its market value of N3.87 billion at the weekend.

    Law Union’s share price closed weekend at the Nigerian Stock Exchange (NSE) at 90 kobo per share. Law Union recorded the highest gain of 23.3 per cent at the NSE last week, rising from 73 kobo to 90 kobo per share.

    The offer price of N1.23 per share represents a premium of 208 per cent on the 60-day volume weighted average share price and 140 per cent on Law Union’s closing share price on February 26.

    The board of Law Union stated that it had considered the offer and would recommend the offer to shareholders of the company for their consideration and approval. However, the transaction is still subject to the approval of relevant regulatory authorities including National Insurance Commission (NAICOM), Securities and Exchange Commission (SEC), Federal Competition an Consumer Protection Commission (FCCPC) and the Nigerian Stock Exchange (NSE).

    The board urged shareholders to exercise caution when dealing in the company’s shares noting that further details on the transaction will be communicated in due course.

    Verod Capital focuses on investing equity and equity-linked capital in growth companies across various consumer-driven sectors in Nigeria, especially the insurance sector.

    Insurance companies are in a hot race to raise new equity capital to meet new minimum capital requirements for various insurance functions as directed by NAICOM. NAICOM had last May released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level. The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion. The deadline was subsequently extended to December 31, 2020.

    Most analysts agreed that the recapitalisation would open up opportunities for mergers and acquisitions, putting the top insurance companies with large capital base in good stead to acquire other companies and build up their base.

    Two strategic investors had recently acquired 38.83 per cent major equity stakes in AIICO Insurance Plc. The acquisitions were consummated through a private placement. AIICO Insurance offered 4.4 billion ordinary shares of 50 kobo each at N1.20 per share.

  • Stock Exchange set for crucial vote on conversion to public company

    Stock Exchange set for crucial vote on conversion to public company

    By Taofik Salako, Capital Market Editor

    The Nigerian Stock Exchange (NSE) is set for Tuesday’s crucial vote that will see the conversion of the six-decade old Exchange from a member-owned mutual company limited by guarantee to a public limited liability company with shareholders.

    In probably the most momentous decision after its formation, members of the NSE will tomorrow in Lagos vote at a court-ordered meeting called to seek final approval for the conversion of the six-decade old self regulatory organisation to a public limited liability company.

    The meeting is the final and most critical stage of the conversion process, known as demutualisation.

    All members of the Exchange, totaling 432 individuals and institutions, are expected to vote at the meeting, in favour or against the scheme of arrangement for the demutualisation.

    Sources in the know told The Nation that the NSE had at the weekend completed the acceptance of proxy forms, which enable members who may not  be present to vote ahead on the resolutions. Besides, designated officials for dealing members or institutional members, both active and inactive, have been formally identified to ease the process of accreditation and voting.

    Valid proxies were required to be duly signed and sealed by the members being represented, accompanied with the passport photograph of the representative. To be accepted as a legal representation, proxies must also be duly stamped by the Commissioner for Stamp Duties with a N50 postage stamp.

    Read Also: Coronavirus: Panic mood on NSE, market capitalisation loses N308bn

    A source indicated that accreditation at the meeting shall strictly be on the basis of valid proxies, designated representatives of institutional and individual members and some select officials and dignitaries. However, voting shall exclusively be done by only duly accredited members and proxies.

    To achieve the demutualisation, the NSE requires not less than three-quarters of the interests of members present and voting either in person or by proxy. Voting at the meeting shall be by poll with each member representing one interest or one vote for or against the resolution.

    With the demutualisation, 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.

    Under the scheme of arrangement scheduled for approval on March 3, 2020, 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 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.

    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.

  • Investors lose N1.35tr as Coronavirus scare worsens equities’ outlook

    Investors lose N1.35tr as Coronavirus scare worsens equities’ outlook

    By Taofik Salako

    Investors in Nigerian equities suffered net loss of about N1.35 trillion in February as global anxiety over the outbreak of Coronavirus COVID-19 and national macroeconomic uncertainties resulted in flight to safety.

    Benchmark indices for Nigerian equities closed weekend with average decline of 9.11 per cent for last month, equivalent to net capital depreciation of N1.35 trillion. The steep decline in February wiped away net capital gain of N966.7 billion that accrued in January 2020, leaving investors with net capital depreciation of 2.33 per cent or N301.9 billion for the two-month period.

    Despite the onset of earnings season, the release of steady corporate earnings and dividends by many corporates and the general undervaluation of Nigerian equities, investors’ appetite remained low throughout the month.

    Analysts agreed that weak macroeconomic outlook and the susceptibility of the Nigerian economy to domestic and global risks of Coronavirus were the major drawbacks of the Nigerian equities market. Nigeria at the weekend recorded its first case of Coronavirus, heightening the tension in the domestic equities market. Nigerian equities recorded their worst weekly performance in 10 months last week with a net loss of N610 billion in the five-day trading session.

    Astute investment banker, Mr. Atedo Peterside said investors were anxious about possible devaluation of Naira and as such were taking safety in short term bet on foreign currency as a hedging strategy.

    Read Also: Coronavirus: ‘More than 100 Nigerians met with Italian’

    Senior Research Analyst, FXTM, Lukman Otunuga, at the weekend said the dramatic and fast-moving consequences of the Coronavirus COVID-19 outbreak threaten Nigeria’s economic outlook.

    According to him, Nigeria is vulnerable to the spread of the COVID-19 virus in economic and health terms because China- one of its main trading partners, is the epidemic’s epicenter. Nigeria’s crude Oil exports to China fell in February amid weaker oil prices as the outlook for global oil demand weakens.

    He noted that Nigeria’s first quarter Gross Domestic Products (GDP) remains exposed to external uncertainties including weaker oil prices, the Coronavirus COVID-10 outbreak, slowing growth in China and the global economy, pointing out that the World Health Organisation (WHO) had identified Nigeria as one of its top 13 priority countries because of the direct links and travel volume to-and-from China.

    Analysts at Cordros Securities called for cautious trading in equities amidst continued weak market sentiments, advising investors to take positions only fundamentally strong companies.

    The All Share Index (ASI)- the value-based common index that tracks all share prices at the Nigerian Stock Exchange (NSE), closed weekend at 26,216.46 points as against 27,388.62 points and 28,843.53 points recorded at the beginning of the week and month respectively. The ASI had opened 2020 at 26,842.07 points. These indicated average decline of 4.28 per cent for the immediate past week.

    Aggregate market capitalisation of all quoted equities at the NSE dropped to a low of N13.658 trillion at the weekend compared with N14.268 trillion and N14.857 trillion recorded at the beginning of the week and month respectively. It had opened the year at N12.958 trillion. The performance of the market capitalisation was moderated by the listing of additional shares during the period, especially the listing of BUA Cement.

    Sectoral analysis indicated that most investors might have suffered above average losses, especially in the banking, insurance and consumer goods sectors. The NSE 30 Index, which tracks the 30 most capitalised stocks at the Exchange, closed weekend with average decline of 4.68 per cent, 9.95 per cent and 2.53 per cent for the week, month and the two-month period respectively. The NSE Banking Index declined by 11.79 per cent last week to worsen its February return to -15.59 per cent. It ended the two-month period with average decline of 11.59 per cent.

    Also, the NSE Insurance Index dropped by 8.22 per cent last week to close the month with a net return of -11.89 per cent. Average year-to-date return in the insurance sector stood at -7.57 per cent. The NSE Consumer Goods Index was the worst hit on the aggregate with average year-to-date return of -22.74 per cent. It lost 3.84 per cent last week to increase February’s return to -18 per cent. The NSE Oil and Gas Index dipped by 2.14 per cent, 6.97 per cent and 10.87 per cent in the immediate past week, February and two-month period respectively. However, the NSE Industrial Goods Index appreciated by 1.08 per cent last week to moderate its February’s return to -1.28 per cent. Average return in the industrial goods sector for the two-month period remains positive at 12.92 per cent.

    Global stock markets also crashed to their worst weekly performance since the 2008 global financial crisis as concerns mounted over the rapid spread of Coronavirus. United States of America’s benchmarks- Dow Jones Industrial Average (DJIA) and Standards and Poors slumped by 11.1 per cent and 10.8 per cent respectively. United Kingdom’s FTSE 100 declined by 10.8 per cent. Japan’s Nikkei 225 Index dropped by 9.6 per cent while China’s CSI 300 Index declined by 5.0 per cent. Europe’s Euro Stoxx Index depreciated by 11.6 per cent. The MSCI EM Index, which tracks emerging markets, dropped by 4.9 per cent while the MSCI FM Index, which tracks frontier markets, declined by 2.6 per cent.

    Investors in Nigerian equities netted N966.7 billion in January 2020, raising hopes that the market might witness a recovery this year after two consecutive years of negative returns. The market had recorded negative average full-year return of -14.60 per cent for the 2019 trading year, equivalent to net capital depreciation of N1.71 trillion for the year. It had recorded negative average full-year return of -17.81 per cent in 2018. The ASI, which doubles as Nigeria’s sovereign equities index, had closed 2018 at 31,430.50 points, down from 38,243.19 points recorded as closing index in 2017. The 2019 pricing performance marked the fifth negative closing in six consecutive years. The only positive performance in six years was in 2017 when the market recorded a positive return of 42.3 per cent, widely regarded as one of the highest global returns for the year.

    Most analysts remained cautious about the short-term outlook for Nigerian equities, after the two-year consecutive decline.

    Analysts at United Capital Plc projected that Nigerian equities may deliver a modest average return of some 5.3 per cent in 2020, although the overall market outlook remains susceptible to external shocks and domestic policies.

  • IFC announces $25m facility for Union Bank customers

    IFC announces $25m facility for Union Bank customers

    By Collins Nweze

     

    INTERNATIONAL Finance Corporation (IFC), a member of theWorld Bank Group, has announced a $25 million localcurrency investment in a risk-sharing facility to expand Union Bank’s lending to small and medium enterprises (SMEs) in Nigeria.

    The facility, which will cover as much as 50 percent of the risk of the bank’s loans to entrepreneurs, aims to help Nigerian businesses grow and create jobs. With IFC’s support, Union Bank plans to offer more products and services to women-owned businesses, especially in Nigeria’s conflict-affected Northern and Delta regions,

    where entrepreneurs face, particularly difficult challenges accessing finance, and more than half the population is excluded from the financial system.

    According to the Chief Executive of Union Bank, Emeka Emuwa, “Union Bank continues to develop  services that promote enterprise and address poverty and financial inclusion. This is in line with our commitment

    to support the communities within which we operate.

    The IFC facility is a welcome development which will further deepen our efforts to support Nigerian

    SMEs and women.”

    Also commenting on the initiative, IFC’s Country Manager for Nigeria, Eme Essien Lore, said: “IFC’s risk

    sharing facility will help Union Bank increase its focus on Nigeria’s underserved areas, positioning it as one of the leading banks that provides customised services to SMEs that are driving job creation and growth across the country.”

    Although small businesses provide over 80 percent of Nigeria’s jobs, a recent World Bank survey found that only 15 percent of having a bank loan or line of credit. It also found that more than half of the women-managed firms surveyed named access to finance as a major obstacle to growth.

    The new facility is part of IFC’s Small Loan Guarantee Program (SLGP), which is

    easing local-currency lending to SMEs in frontier markets. SLGP is backed by the International Development Association’s (IDA) Private

    Sector Window, which is providing a first-loss guarantee, allowing IFC to scale

    up its support to underserved and unbanked SMEs.

     

    IFC’s investment also includes support from the Women Entrepreneurs Finance Initiative (We-Fi), in the form of performancebased incentives for increased lending to womenowned SMEs.

    Union Bank has continued to support SME and empower women-led businesses through tailored products and services.

  • Wigwe, others for entrepreneurship forum

    Wigwe, others for entrepreneurship forum

    By Collins Nweze

     

    ACEESS Bank Group Managing Director/Chief Executive Officer (CEO) Herbert Onyewumbu Wigwe is among the speakers billed for the Harvesters’ Entrepreneurs Forum (HEF), which holds on tomorrow.

    Others are GMD, Interswitch Mitchell Elegbe; cofounder, PiggyWest, Odun Eweniyi and Pastor Bolaji Odun.

    According to the convener of the event, Idowu, who is the Lead Pastor, Harvester International Christian

    Centre, the event is the fourth in the series, entitled: Re-Imagining Africa’s path to prosperity through innovation

    would hold in four centres in Lagos.

    At a briefing yesterday, he said the speakers were chosen because they had demonstrated time-tested and

    valuable insights in their endeavours, thereby rewriting the African narrative. Idowu said: ‘’This platform

    was prompted by the concerns for bridging the entrepreneurship deficits that has continue to limit the unleashing of the true potential of the African continent’s opportunities hence the facilitation of civic engagements and social development initiatives like the HEF, which has been premised upon the urgent and

    crucial interventionist initiative primarily aimed at providing a platform for business and enterprise development

    as well as aimed at equipping entrepreneurs and people of similar inclinations with practical and

    hands on business knowledge to help them achieve and sustain business success.’’ He added: “We intend to

    bridge that knowledge gap by raising awareness as well as engage in conversations that will restore the dignity

    of sustainable wealth by pointing young people in our societies towards good modelling.

    By this I mean, canvassing for modelling of young people’s lives and success stories around successful models whose success stories can be traced to dignified labour as against glamorising questionable sources of wealth.

    This for us is the way to raise global role models and sustainable wealthy generations from the emerging African landscape.’’ Idowu announced that the church plans to launch a social initiative – the Harvesters

    Social Enterprise Award of US10,000 – to anyone who could initiate practical solutions to any of the myriad of

    social problems confronting the continent.

  • Fed Govt adopts annual ‘Finance Act’ to manage economy

    Fed Govt adopts annual ‘Finance Act’ to manage economy

     

    By Taofik Salako, Capital Market Editor

    Nigeria has adopted an annual financial management policy that entails simultaneous use of national budget and a corresponding separate Act of the National Assembly, ‘Finance Act’, to stimulate and manage national economic growth.

    President Muhammadu Buhari had on January 13, 2020 signed the maiden ‘Finance Act’, Finance Act 2019, which was aimed at supporting the 2020 budget.

    Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, yesterday in Lagos said henceforth every Appropriation Bill will be accompanied by Finance Bill in a more dynamic way that provides government with flexibility to manage economic development.

    Ahmed spoke during a visit to the Nigerian Stock Exchange (NSE), where she was honoured with the ceremonial beating of the closing gong for the day’s trading session.  Ahmed was accompanied by Ms. Mary Uduk, Acting Director-General, Securities and Exchange Commission (SEC) and Dr. Sarah Alade, Special Adviser to the President on Finance and Economy, among others.

    She explained that the government will use the Finance Act to address specific economic challenges including immediate policy reforms and incentives for identified sectors of the economy in line with the overall fiscal objective of the government.

    She pointed out that while the Finance Act 2019 had provided many incentives, the next Finance Act will make provisions for incentives that would further make the capital market more attractive to investors.

    According to her, the government would introduce more tax incentives to boost investments in the Nigerian capital market while working with all stakeholders to initiate and implement policies that will enhance the growth of the market.

    She noted that the capital market is regarded as the growth engine of any economy and assured that the government will continue to work with the NSE and other stakeholders in order to encourage more Nigerians to invest in the domestic capital market.

    Ahmed however clarified that government incentive policy will henceforth apply to only investors that have evidently invested and contributed to national economic growth through job creation, investment through the capital market and compliance with rules and regulations.

    “Going forward, we are committed to moving away from blunt and expensive fiscal incentives – like import duty waivers or lengthy tax holidays – that reward investors merely for their intention to invest. Rather, we will design, and implement targeted and more efficient fiscal incentives that reward investors after they have kept their promises to invest, create jobs, deepen our capital markets, and abide by applicable rules and regulations,” Ahmed said.

    She added that the national fiscal reforms will increasingly complement national trade and monetary policies.

    She said the government has made tremendous progress in its effort to create a conducive business environment for all investors adding that the target is to move Nigeria into the top 100 on the 2020 World Bank’s Doing Business Rankings.

    “It is our expectation that this enabling business environment will spur the industry, innovation and investment that our people, world over, are renowned for and accelerate our industrialisation in the light manufacturing, agro-processing, petrochemicals and construction sectors, which seek capital for investment from the NSE,” Ahmed said.

    She urged the private sector to partner with the government to ensure that fiscal, trade and monetary policies, as well as developmental programmes and projects, succeed in unlocking the latent potential of Nigerians and other natural endowments, in line with the developmental aspirations under the Economic Recovery and Growth Plan (ERGP) and successor economic plans.

    Responding to the capital market operators’ request to defer the planned recapitalisation exercise in the market, Ahmed said, it would make them stronger and compete better in the market.

    According to her, with the impending demutualisation of the NSE, stockbroking firms would have more businesses to do and therefore need to recapitalise to operate better.

    Also responding to comments by stockbrokers that many ministers had in past come to the NSE with many promises without fulfilling them, Ahmed assured that her visit would be different because she is committed to ensuring that the capital market is used to unlock the economic potential of the country.

    In his welcome address, Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema commended the government for its return to the January – December budget cycle, which raises the chances of higher budget implementation and the Finance Act 2019, which contains incentivising clauses for investment in the capital markets.

    He noted the need for all stakeholders to redouble efforts aimed at accelerating national economic growth citing the forecasts by multilateral agencies and national bodies that imply that as a nation, Nigerian economy must grow at between eight to 10 per cent and inflation should come down to single digit rates, if it must enjoy robust real per capita income growth.

    “This is not a short-term task but a long-term one and we look forward to the sequel to the Economic Recovery and Growth Plan (ERGP) to address this existential economic threat of a sustained slow growth. Suffice it to say that the government’s fiscal and monetary reforms over the past two months have shown some intent at tackling the nation’s challenges. In particular, we note the clauses in the Finance Act 2019 and how they better recognise the income generating status of micro, small and medium scale enterprises – thereby taxing them appropriately,” Onyema said.

    He assured that as the NSE transforms operationally and institutionally, it is confident in becoming even better positioned to support the government in raising the right-sized and long-term developmental capital required for financing its economic objectives.

    According to him, apart from supporting capital raising efforts of government through innovative products such as the green bonds, the NSE has also developed a framework that supports the issuance, listing and trading of tax credits; in order to complement the road infrastructure development and refurbishment investment scheme.

    “We are equally positioned to unlock significant investment value for the nation through the listing of public utilities and state-owned enterprises, as well as promote the knowledge economy in terms of public sector capacity building through our technology-based learning management system – the NSE X-Academy. Finally, through our government relations activities we will continue to partner and engage with the government to advocate for policies that deliver an enabling business environment for the Nigerian capital market and the economy at large,” Onyema said.

     

     

  • Nigerian equities hit two-month low with N181b loss

    Nigerian equities hit two-month low with N181b loss

    By Taofik Salako, Capital Market Editor

    Nigerian equities suffered their worst single-day decline in the past two months yesterday as the stock market reopened to massive selloffs across the sectors.

    Benchmark indices at the Nigerian Stock Exchange (NSE) indicated average decline of 1.27 per cent yesterday, equivalent to net capital depreciation of N181 billion, the largest single-day decline since December 24, 2019.

    With 32 decliners to five advancers, the market was overwhelmed by the bears, leaving all sectors in the red. Average year-to-date return dipped to 0.74 per cent while the market has lost an average of 6.25 per cent so far this month.

    Market analysts said investors’ risk aversion was further stoked by feelers that the influential banking sector might be further subjected to increased regulatory headwinds due to the statements attributed to the Central Bank of Nigeria (CBN) at the Bankers’ Committee meeting last week.

    The All Share Index (ASI)- the value-based common index that tracks all share prices at the Exchange, dropped by 347.59 points or 1.27 per cent to close at 27,041.03 points as against 27,388.62 points recorded as opening index.

    Aggregate market value of all quoted equities also decline by the same margin from its opening value of N14.268 trillion to close at N14.087 trillion.

    All sectoral indices closed negative. The NSE Banking Index declined by 4.78 per cent. The NSE Industrial Goods Index dropped by 0.85 per cent. The NSE Consumer Goods Index dipped by 0.72 per cent. The NSE Insurance Index depreciated by 0.47 per cent while the NSE Oil and Gas Index dipped by 0.45 per cent.

    Julius Berger Nigeria led the decliners with a loss of N1.60 to close at N22.40 per share. Nigerian Breweries followed with a drop of N1.45 to close at N47. Guaranty Trust Bank dropped by N1.05 to close at N26.90 per share. Cadbury Nigeria lost 90 kobo to close at N8.20 while Zenith Bank declined by 76 kobo to close at N19.10 per share.

    On the positive side, Law Union and Rock Insurance led the advancers with a gain of 7.0 kobo to close at 80 kobo per share. May and Baker Nigeria rose by 5.0 kobo to close at N1.87. Sterling Bank chalked up 4.0 kobo to close at N1.50 per share. Linkage Assurance added 2.0 kobo to close at 45 kobo while Vitafoam Nigeria inched up by a kobo to close N4.51 per share.

    Total turnover stood at 429 million shares valued N7.29 billion in 4.533 deals. Banking stocks dominated the activities chart. Guaranty Trust Bank was the most active stock with a turnover of 177.13 million shares valued N4.79 billion. FBN Holdings followed with 60.09 million shares worth N329.48 million while Zenith Bank placed third with 56.15 million shares valued N1.09 billion.

    “We anticipate a mixed performance in subsequent trading sessions as investors are expected to position for dividends on one hand and profit taking on the other,” Afrinvest Securities stated.

    Nigerian equities had recorded net loss of N190.8 billion last week as weak domestic sentiment and global risk concerns sustained continued depreciation in share prices in Nigeria.

    Benchmark indices had indicated average decline of 1.32 per cent at the weekend, equivalent to net capital depreciation of N190.8 billion for the immediate past week.

    Despite the onset of the aggressive period of the earnings season, investors in Nigerian equities remained cautious and bargain-hunters were overwhelmed by discounted open market orders by divesting investors seeking to attract deals in a supply-driven buyer’s market.

    Most market analysts remained cautious about the outlook for the Nigerian market in spite of expectations that immediate returns, in terms of dividend yields, may significantly overwhelm nominal saving rates and average yield in the fixed-income market.

    “Following four weeks of consecutive losses, we expect to see some bargain hunting in early trades next week. However, we maintain a bearish outlook in the near term as overall investor sentiment remains weak,” Afrinvest Securities, a major stockbroking firm, had stated at the weekend.

    Analysts at Cordros Securities advised investors to trade cautiously and take positions only in “fundamentally justified stocks”, citing the continued weak market sentiments.

  • International Breweries reassures on long-term value

    By Collins Nweze

     

    The board and management of International Breweries (IB) Plc have assured shareholders and other stakeholders that the company remains committed to creating long-term value for all stakeholders.

    Directors of International Breweries at the weekend paid a courtesy visit to the Nigerian Stock Exchange (NSE) in commemoration of the conclusion and listing of the company’s N165 billion rights, reputed as the largest rights issue in Nigerian market.

    International Breweries, a subsidiary of Anheuser-Busch InBev (AB InBev), had offered 18.27 billion ordinary shares of 50 kobo each to existing shareholders at N9 per share on the basis of 17 new ordinary shares of 50 kobo each for every eight ordinary shares held as at November 6, 2019. The rights issue was fully subscribed, injecting N165 billion into the company.

    Finance Director, International Breweries Plc, Mr. Bruno Zambrano said the recapitalisation of the company through the rights issue has led to improvement in its operational and financial flexibility while significantly reducing financing cost.

    He assured shareholders of the company’s commitment to creation of long-term value as rewards for their supports over the years.

    According to him, the company will continue to explore every option to bring smiles to consumers and shareholders.

    He pointed out that at the heart of International Breweries’ strategy is the building of a sustainable business for the long-term.

    Non Executive Director, International Breweries Plc, Mrs Olutoyin Odulate who performed the ceremonial beating of the closing gong at the NSE, noted that with the success of the recapitalisation and ongoing efforts by the board and management, the company has emerged as a market leader to watch out for.

    In his remarks, Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, praised the company for its growth drive and reiterated the commitment of the Exchange to working with quoted companies to deliver values to their stakeholders.

    He said the NSE had been engaging the government on tax incentives for quoted companies such as International Breweries in order to support their growth and productivity.

    He emphasised the need for the company to continuously engage the market through adequate briefing on its operations and financial performance.

    ABInBev had invested in capacity expansion including about N90 billion or $250 million in its Sagamu plant while it also injected N124 billion or $341 million through the rights issue.

    Read Also: Nigerian Breweries to pay N16.1b net profit as dividend

     

    Unarguably the number two brewer in Nigeria, International Breweries now controls about 25 per cent of the Nigerian beer market through its hold of market share on the back of its two core brands.

    Anheuser-Busch InBev holds the majority equity stake of 75.1 per cent in International Breweries. The N164.39 billion recapitalisation came after the consolidation of AB InBev’s Nigerian operations under a single corporate entity.

    AB InBev had in 2017 merged its three indirect Nigerian subsidiaries-International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited.The merger was done through a scheme of merger with International Breweries subsisting as the post-merger company. The merger was seen as a major strategic move by Anheuser-Busch InBev to upend competition and consolidate its Nigerian base for further expansion into the Sub-Saharan Africa (SSA).

    With the 2017 business combination, AB InBev’s majority equity stake in International Breweries increased to 75.1 per cent. A total of 5.302 billion ordinary shares were issued for the merger. With the supplementary listing of 5.302 billion ordinary shares, the total issued and fully paid up shares of International Breweries had increased from 3.294 billion to 8.596 billion ordinary shares.

    The merger was believed to be a major competitive move by AB InBev to give its operations a major nationwide push to increase its market share. International Breweries is located in Ilesa, Osun State in the South West region. Intafact Beverages’ brewery is situated in Onitsha, Anambra State in the South-East region while Pabod Breweries is located in Oginigba, Port Harcourt, Rivers Sate in the South-South region.

    Prior to the merger, AB InBev held 72.17 per cent majority equity stake in International Breweries through its subsidiary-Brauhaase International Management GMBH. SABMiller Nigeria Holdings BV-another subsidiary of AB InBev had held 75 per cent and 82.81 per cent majority equity stakes in Intafact and Pabod respectively. Ministry of Finance of Anambra State had held 10 per cent equity stake in Intafact while Ministry of Finance Incorporated of Rivers State held 14.52 per cent equity stake in Pabod.

    After the merger of the three companies-SABMiller Nigeria Holdings BV and Brauhaase International Management GMBH hold 47.4 per cent and 27.7 per cent equity stake respectively in International Breweries, giving the foreign majority core investor controlling equity stake of 75.1 per cent. Ministry of Finance of Anambra State holds 4.7 per cent equity stake while other minority shareholders hold the remaining 20.2 per cent equity stake.

  • Access fires up women finance

    By Collins Nweze

     

    Access Bank Plc has further reinvigorated its multi-billion Naira women-entrepreneur financing scheme with the launch of a new television campaign to create awareness and encourage more participation by Nigeria’s female entrepreneurs.

    With more than N13.3 billion already provided to women-owned businesses in Africa, Access Bank is through the new campaign putting its weight behind Nigeria’s female entrepreneurs.

    Access Bank’s “W Initiative”, which has more than 12 million female customers, launched a new TV ad campaign to create awareness on the W power loan -a product specially designed for its women owned businesses.

    The TV ad campaign encapsulates the vision of the bank to empower women from all walks of life by encouraging them to take advantage of the W power loan to grow and sustain their businesses.

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    The campaign which has been unveiled on digital platforms and broadcast on TV in a series of high-profile commercials, features two lead characters: Lady W played by renowned singer Aituaje (Waje) Iruobe and Tolu T played by actress and on-air personality, Omotunde (Lolo1) Adebowale. Both ladies seem to be at opposite ends of a string as Waje, the go-getter who jumped at the W power loan, seized the opportunity provided by Access Bank to grow her business quickly but Lolo1 kept procrastinating.

    Coordinator, W Initiative, Access Bank, Ayona Trimnell pointed out that in a country where almost 50 per cent of entrepreneurs are women, Nigerian women cannot afford to sweep the huge opportunity provided by the campaign under the carpet.

    According to Trimnell, the TV ad clearly shows Access Bank is putting a stake on the ground as the bank is committed to ensuring that women have access to finance.

    “We are letting the world know that we are committed to giving women access to finance. A number of financial institutions talk the talk- there are a number of programmes out there but actually providing the funds is challenging and froth with many obstacles. With high interest rates, other barriers to entry, so many women businesses cannot thrive,” Trimnell said.

    Trimnell said the W Power loan campaign also showcases the many benefits of being a member of the W community including a number of capacity building initiatives and networking opportunities.

     

  • Nigeria loses N191b as global equities tumble

    By Collins Nweze

     

    Nigerian equities closed weekend with net loss of N190.8 billion as weak domestic sentiment and global risk concerns sustained continued depreciation in share prices in Nigeria and other global stock markets.

    Benchmark indices at the Nigerian equities market indicated average decline of 1.32 per cent at the weekend, equivalent to net capital depreciation of N190.8 billion for the immediate past week.

    The continuing price depreciation depressed the average year-to-date return for Nigerian equities to 2.04 per cent.

    Despite the onset of the aggressive period of the earnings season, investors in Nigerian equities remained cautious and bargain-hunters were overwhelmed by discounted open market orders by divesting investors seeking to attract deals in a supply-driven buyer’s market.

    Nigeria’s second largest financial institution, Zenith Bank International, released its audited results at the weekend with net profit of N208.8 billion and final dividend per share of N2.80. The final dividend represents a dividend yield of 14.1 per cent on the bank’s closing price of N19.85 per share at the weekend.

    United Capital also announced a dividend per share of 50 kobo, a dividend yield of 14.5 per cent on the investment banking group’s closing price of N3.45 per share at the weekend.

    Most market analysts remained cautious about the outlook for the Nigerian market in spite of expectations that immediate returns, in terms of dividend yields, may significantly overwhelm nominal saving rates and average yield in the fixed-income market.

    “Following four weeks of consecutive losses, we expect to see some bargain hunting in early trades next week. However, we maintain a bearish outlook in the near term as overall investor sentiment remains weak,” Afrinvest Securities, a major stockbroking firm, stated at the weekend.

    Analysts at Cordros Securities advised investors to trade cautiously and take positions only in “fundamentally justified stocks” citing the continued weak market sentiments.

    The All Share Index (ASI)-the value-based common index that tracks all share prices at the Nigerian Stock Exchange (NSE), closed weekend at 27,388.62 points as against its week’s opening index of 27,755.87 points.

    Aggregate market value of all quoted equities also declined from its week’s opening value of N14.456 trillion to close weekend at N14.268 trillion. The difference between the ASI and market value was due to the additional listing of shares by AIICO Insurance Plc.

    All sectoral indices also closed negative with the exception of the NSE Industrial Goods Index, which rose by 1.0 per cent. The NSE Consumer Goods Index slumped by 6.8 per cent.

    The NSE Banking Index depreciated by 2.6 per cent. The NSE Insurance Index dropped by 2.1 per cent while the NSE Oil and Gas Index dipped by 1.28 per cent.

    Nigerian equities mirrored global stock market decline during the week. From advanced to emerging and developing economies, global equities stuttered during the week as investors continued to weigh global risk of China’s Coronavirus crisis amid global trade disputes and uncertainties in the crude oil market.

    In United States of America, the benchmark Dow Jones Industrial Average (DJIA) dropped by 0.6 per cent while the S & P 500 and NASDAQ declined by 1.1 per cent each.

    In United Kingdom, the FTSE Index dropped by 0.3 per cent.  Germany’s XETRA DAX indicated a drop of 1.1 per cent. France’s CAC 40 Index dipped by 0.7 per cent. Hong Kong’s Hang Seng Index dropped by 1.8 per cent. Japan’s Nikkei 225 Index declined by 1.3 per cent.

    The Euro Stoxx, which tracks European markets, posted a negative return of -0.9 per cent. The MSCI EM Index, which tracks emerging markets, dropped by 1.0 per cent while the MSCI FM Index, which tracks the frontier markets, slipped by 0.5 per cent.

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    Also, Brazil’s Ibovespa Index dropped by 1.3 per cent. Russia’s RTS Index indicated average decline of 0.9 per cent. India’s BSE Sens dropped by 0.2 per cent.

    Saudi Arabia’s Tadawul Index declined by 1.7 per cent while Qatar’s DSM 20 Index dipped by 0.9 per cent. However, China’s Shanghai Composite Index rose by 4.2 per cent as the Chinese government hinted of possible stimulus for companies affected by the Coronavirus crisis.

    Across Africa, it was a thoroughly bearish market. South Africa’s FTSE/JSE All-Share Index dropped by 1.1 per cent. Kenya’s NSE 20 Index declined by 2.3 per cent. Egypt’s EGX 30 Index posted a drop of 1.0 per cent.

    Mauritius’ SEMDEX Index dipped by 0.8 per cent while Ghana’s GSE Composite Index slipped by one basis point. However, Morocco’s Cassablanca MASI Index appreciated by 1.4 per cent.

    Meanwhile, the momentum of activities at the Nigerian equities market increased during the week. Total turnover rose to 1.50 billion shares worth N17.91 billion in 18,515 deals as against a total of 912.2 million shares valued at N12.13 billion traded in 17,083 deals two weeks ago.

    The financial services sector remained the most active sector with a turnover of 1.23 billion shares valued at N12.97 billion in 11,741 deals, representing 81.8 per cent and 72.45 per cent of the total equity turnover volume and value respectively.

    The consumer goods sector followed with 83.88 million shares worth N3.09 billion in 1,937 deals while the third place was occupied by the conglomerates sector with a turnover of 49.72 million shares worth N104.2 million in 517 deals.

    The three most active stocks were Zenith Bank Plc, Sovereign Trust Insurance Plc, and Guaranty Trust Bank Plc. The three most active stocks accounted for 636.624 million shares worth N10.123 billion in 4,539 deals, representing 42.47 per cent and 56.53 per cent of the total equity turnover volume and value respectively.

    Also, a total of 1,040 units of Exchange Traded Funds (ETFs) valued at N3.61 million were traded in 12 deals compared with a total of 1,540 units valued at N137,421 traded in five deals penultimate week.

    In the sovereign debt market, a total of 40,469 units of Federal Government bonds valued at N47.68 million were traded in 25 deals compared with a total of 23,923 units valued at N28.986 million traded in 22 deals penultimate week.

    There were 24 gainers against 28 losers during the week compared with 19 gainers and 35 losers recorded in the previous week. C & I Leasing led the gainers, in percentage terms, with a gain of 26.85 per cent to close at N6.85.

    AIICO Insurance followed with a gain of 26.25 per cent to close at N1.01, United Capital appreciated by 17.35 per cent to close at N3.45. NPF Microfinance Bank garnered 11.7 per cent to close at N1.24 while Africa Prudential chalked up 11.1 per cent to close at N5.20 per share.

    On the negative side, Law Union and Rock Insurance led the losers with loss of 36.5 per cent to close at 73 kobo. AXA Mansard Insurance followed with a drop of 10 per cent to close at N1.80. SFS Real Estate Investment Trust also dropped by 10 per cent to close at N76.95.

    Forte Oil declined by 9.97 per cent to close at N16.70 while May & Baker Nigeria dropped by 9.9 per cent to close at N1.82 per share.