Category: Equities

By Taofik Salako, Capital Market Editor

Former Secretary General of Commonwealth, Chief Emeka Anyaoku, has urged the Federal Government to utilise the Nigeria’s capital market to develop the economy.

Besides, Chief Anyaoku  applauded the recent move by the Central Bank of Nigeria (CBN), in collaboration  with the Bankers Committee, to leverage Public-Private Partnership (PPP) approach to bridge infrastructure gaps.

Specifically, the partnership is expected to commence with construction of four roads, details of which are still hazy.

Addressing the Principal Officers of the Chartered Institute of Stockbrokers (CIS) during courtesy call to him in Lagos, Anyaoku who commended the board and management of the Institute for taking it to greater height explained that governments in developed economies utiliSe the capital market to fund infrastructure projects.

He stated that all tiers of government should take advantage of long term investment opportunities in the market to raise long- term fund for development projects.

Anyaoku, whose visit was led by the CIS’ President and Chairman of Council, Mr Adedapo Adekoje noted that there was a  growing need for the federal government to mobilise private capital through the market to raise long-term fund for infrastructure development.

“The capital market has important roles to play in the national economy. The managers of the capital market and the operators play pivotal roles. Developed countries did not just develop on the basis of  the government funding alone, but participation of the private sectors. I am happy that the Central Bank of Nigeria (CBN) is collaborating with Bankers Committee on how to fund the huge infrastructure gap in Nigeria through Public-Private Partnership (PPP)

“Many big companies in Nigeria are performing below average because of lack of resources. The resources provided by the government is inadequate. There is a need for mobilization of private capital to enable the companies operate optimally,” Anyaoku said.

He warned against Nigeria’s adoption of common currency in the West African region saying it was too early and should not be rushed.

He argued that It took European countries many years to achieve common currency and  the management of fiscal policies of the member countries must be studied.

Commenting on the closure of the bother, the technocrat said the opportunities created by the closure would be used to protect our local industries and stimulate economic growth. But he cautioned that bother closure should not be a permanent decision.

Earlier in his opening remarks, Adekoje who was accompanied by the Institute’s First Vice President, Mr Omotunde Amolegbe, the Second Vice President, Mr Oluwole Adeosun and the Registrar and Chief Executive, Mr Adedeji Ajadi said the visit was in recognition of Anyaoku’s service to Nigeria and to seek his participation in the Institute’s activities as an elderly statesman.

By Taofik Salako, Capital Market Editor

The Nigerian Stock Exchange (NSE) has published the maiden edition of StockTown, a comic book aimed at promoting financial literacy in Nigeria.

StockTown makes use of illustrated characters story to educate readers of all ages about the importance of savings and investment. In its first issue, readers are introduced to Mora Johnson and her middle-class family who are experiencing financial hardship that pushes Mora to want to learn more about investment and financial independence.

Commenting on the comic book, Chief Executive Officer, NSE, Oscar Onyema, said: “StockTown is the product of a passionate idea long held by the Exchange to empower individuals across all levels to make good financial decisions and better their lives now and in the future. In a drastically evolving financial landscape, the Exchange continues to find new ways to communicate the ideas of saving and investment using products available on its platform. We hope this comic, which demonstrates the idea of buy and selling securities in simple terms, can crowd-in the financially excluded, millennials and all lovers of comics.”

The launch of StockTown builds on the Exchange’s strong commitment to promoting financial literacy in Nigeria. Yearly, the Exchange implements initiatives targeted at children and youths, aimed at building a financially savvy generation. The Exchange commemorates Global Money Week by hosting a workshop for youths at its offices and conducting outreach programmes in cities where it operates. In 2019, it reached over 60,000 youths during the weeklong programme.

Consistently, the Exchange hosts secondary schools, undergraduates and young upwardly mobile professionals to X-Tours, a financial literacy workshop that culminates in a tour of the trading floor and meeting with Stockbrokers. Through these channels, NSE is making significant contributions to reducing the level of financial exclusion in Nigeria to 20 per cent in line with its mandate as a member of the National Finance Inclusion Steering Committee led by the Central Bank of Nigeria.

By Taofik Salako, Capital Market Editor

Shareholders of AXA Mansard Insurance Plc has approved a divestment plan that involves sale of the insurance company’s real estate investments and pension management subsidiary.

At the extraordinary general meeting in Lagos, shareholders unanimously mandated the board to divest from AXA Mansard Pensions Limited, the group’s pension management subsidiary. Shareholders also authorised the directors to divest from real estate investment, without necessarily outlining the specific real estate assets.

The meeting authorised the directors to appoint such advisers, professionals and parties that they deem necessary, upon such terms and conditions that the directors may deem appropriate with regard to the sale of the subsidiary and real estate assets.

According to shareholders, the board of directors is “authorised to take all steps and do all acts that they deem necessary for the successful implementation” of the above resolutions on sale of AXA Mansard Pension and real estate assets.

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 the National Insurance Commission (NAICOM). NAICOM had in May 2019 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.

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.

By Taofik Salako, Capital Market Editor

A new strategic investor, LeapFrog III Nigeria Insurance Holdings Limited, has acquired 38.83 per cent major equity stake in AIICO Insurance Plc. The acquisition was consummated through a private placement.

AIICO Insurance offered 4.4 billion ordinary shares of 50 kobo each to LeapFrog at N1.20 per share. The additional shares issued under the private placement increased AIICO Insurance’s issued share capital from 6.93 billion ordinary shares of 50 kobo each to 11.33 billion ordinary shares of 50 kobo each.

The newly issued shares have been listed at the Nigerian Stock Exchange (NSE), formally concluding the acquisition process. Shareholders of AIICO Insurance had at the annual general meeting in 2016 authorised the board of directors to raise new capital to bolster the operations of the insurance company.

The new equity fund will boost the capital base of AIICO Insurance as the Nigerian insurance industry sets deadline of December 31, 2020 for new minimum capital base for various insurance functions.

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 the National Insurance Commission (NAICOM). NAICOM had in May 2019 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.

Many insurance companies had recently raised new equity capital in what was regarded as the first round of the capital raising session for the industry.

By Taofik Salako, Capital Market Editor

THE Securities and Exchange Commission (SEC) has canvassed for a strong incentive programme that will help to stimulate much-needed private investments in the key sectors of the Nigerian economy.

Its Acting Director-General, Ms Mary Uduk, said while the recent Finance Act made some commendable initiatives supportive of the capital market, government should look at the larger picture of major incentives that can stimulate investments in major sectors of the economy.

She noted that the government needs to stimulate inflow of capital into key sectors of the economy to realise its goals of economic growth and development.

He outlined that special purpose vehicles and innovative investments like infrastructure fund that invest in key infrastructure, venture capital and private equity funds that invests in novel ideas and small and medium enterprises and other companies on the stock market should be encouraged with tax incentives and other concessions. She pointed out that the government can encourage the development of key sectors like mining and agriculture with specific incentives.

“The government has through the Finance bill answered some of our prayers. There are others that we thought they would have done like the issue of taxes but they gave us what they thought we should have; we will continue to push for more tax reductions in different areas. We also expected that government will give us some other palliatives for some companies to encourage them to come to the market,” Uduk said.

She allayed fears over the volatility in price movements at the stock market noting that there are adequate regulatory mechanisms to protect investors and ensure the market operates in fair and orderly manner.

Uduk said the ongoing update of shareholders’ records by stockbroking firms and other operators to include bank verification number (BVN) and other vital details will help to resolve the problem of unclaimed dividends.

She urged shareholders that have unclaimed shares and dividends to update their accounts with their stockbroking firms or registrars.

“As long as people don’t come to claim their shares it will be difficult to wipe out unclaimed dividends. We have been working with the brokers to get in touch with these people who bought shares in different names to come forward and claim their shares it will be difficult to wipe out those unclaimed dividends. If I have shares and I don’t come forward to claim them either because I had forgotten the names with which I bought them, as long as they are not claimed, it will be difficult to know where to send these dividends to. So they are still the legacy issues that we are trying to combat. But for the new dividends today that are being issued, we don’t have problems there,” Uduk said.

She said the Commission may consider recapitalisation of the capital market operators to push the consolidation of the operators into strong firms that will be able to play more actively in the market.

“Recapitalisation should happen for the market to be better. If we have say 20 or 50 big firms playing as opposed to what we have now which is 255 the market would be better.

We want strong firms, so it’s something that should happen, well capitalized firms as opposed to the situation we have now, Let’s work towards what will make it happen. A number of other sectors are recapitalising; we are asking our CMOs to think about it because sooner than later it would have to happen,” Uduk said.

By Taofik Salako, Capital Market Editor

Nigerian equities continued on the decline yesterday but increased bargain-hunting moderated the bearishness. Benchmark indices showed average marginal decline of 0.1 per cent, equivalent to net capital depreciation of N13 billion.

Aggregate market value of all quoted equities at the Nigerian Stock Exchange (NSE) dropped from its opening value of N14.360 trillion to close at N14.347 trillion. The All Share Index (ASI)-the common value-based index that tracks all shares prices at the Exchange, declined from 27,570.94 points to close at 27,547.56 points.

With these, the average year-to-date return dropped to 2.6 per cent. Equities have lost 4.4 per cent so far this year.

Sectoral indices showed mixed performance. The NSE Banking Index dropped by 0.5 per cent while the NSE Consumer Goods Index dipped by 0.01 per cent.

Meanwhile, the NSE Insurance Index appreciated by 0.2 per cent while the NSE Industrial Goods Index and NSE Oil and Gas Index closed flat.

There were 13 losers against 12 gainers. FBN Holdings, Vitafoam Nigeria, United Bank for Africa and Guaranty Trust Bank lost 15 kobo each to close at N5.80, N4.55, N7.55 and N28.85. Zenith Bank dropped by 10 kobo to close at N19.50 while Africa Prudential lost 9.0 kobo to close at N4.66 per share.

On the positive side, Stanbic IBTC Holdings led with a gain of 50 kobo to close at N38.50. C & I Leasing followed with a gain of 40 kobo to close at N5.80. UACN Property Development Company chalked up 9.0 kobo to close at 99 kobo while United Capital added 5.0 kobo to close at N2.93 per share.

Total turnover increased by 24.9 per cent to 168.07 million shares valued at N2.16 billion in 3,075 deals. Zenith Bank was the most active stock with a turnover of 48.99 million shares valued at N953.24 million. Guaranty Trust Bank followed with a turnover of 17.07 million shares valued at N494.85 million while United Capital placed third with 15.64 million shares worth N45.7 million.

Read Also: Nigerian equities can repeat 2017 feat in 2020, says Kurfi

“We maintain our bearish outlook on the equities market pending the corporate earnings release of tier-1 banking stocks. However, we note that there are opportunities for bargain hunting,” analysts at Afrinvest Securities stated.

Most analysts expected Nigerian equities to close 2020 with positive return, although the short-term outlook for the market remained cautious.  The stock market closed 2019 with 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 2019 pricing performance marks the fifth negative closing in six consecutive years. After a world-leading positive return of 42.3 per cent in 2017, the market had reversed to negative in 2018 with average full-year return of -17.81 per cent. Aggregate market value of all quoted equities at the NSE had declined by N1.889 trillion in 2018. The stock market had been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015. Against the general expectation that political transition and new government will quicken a rebound, equities closed 2016 with a net capital loss of N604 billion.

By Taofik Salako, Capital Market Editor

President, Nigerian Stock Exchange (NSE), Otunba Abimbola Ogunbanjo, has said the ongoing process of converting the Exchange from a mutual member-owned organisation limited by guarantee to a public limited liability company limited by shares will be beneficial to the Nigerian capital market.

The conversion, known as demutualisation, has reached the final stage with members of the Exchange scheduled to meet early next month to consider and approve the scheme of arrangement, the final document for the conversion, and to empower the transition of the council to a board of director.

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.

Ogunbanjo said the conversion will make the Exchange the 57th exchange to demutualise among the 70 members of the World Federation of Exchanges as at June 27, 2019; with benefits and opportunities becoming available to members and other stakeholders of the Exchange.

He said the NEG will benefit from improved liquidity and capital management as the Exchange easily raise funds to finance strategic objectives and expansion.

According to him, the opportunity for a potential initial public offer or strategic investment is created, opening up opportunities for domestic and institutional investors and creating liquidity for existing members.

“Demutualisation enables the Exchange to raise capital efficiently and effectively at market determined pricing. Members can realise the economic value of their interest by exercising the right to sell. Capital management is critical to an Exchange’s sustenance, demutualisation enables the Exchange to optimise the level and mix of capital reserve,” Ogunbanjo said.

READ ALSO: Nigerians to own shares as Stock Exchange goes public

He outlined that with demutualisation, the Exchange will be a public company and its shares will be tradable on an available exchange in accordance with the SEC’s regulations.

He added that demutualised Exchange and its subsidiaries will be subject to high standards of corporate governance expected of public companies to take decisions that are in the interest of all members as well as the Exchange.

“In regards to regulatory functions; the separation of ownership and trading rights will give the Exchange and its subsidiaries greater independence from its professional intermediaries. As a public company, the board of directors of the Exchange is required to act in a manner that benefits the company and its shareholders including minority shareholders. The board of directors must also take decisions that have benefits to a broader scope of stakeholders such as employees, suppliers, shareholders, government etc,” Ogunbanjo said.

By Taofik Salako, Capital Market Editor

Seplat Petroleum Development Company Plc has emerged as the winner of Award for Excellence in Corporate Social Responsibility in the indigenous petroleum producer category at the Nigerian International Petroleum Summit (NIPS) 2020.

According to the organisers of the summit and award, Seplat was recognised for its huge commitment to sustainable CSR programmes for the 2019 business year and the impactful effects they had on the company’s host communities and the country at large.

Over the years, Seplat had deployed its signature CSR initiative: The Eye Can See, Pearls Quiz and Safe Motherhood programmes across its host communities in Delta, Edo and Imo states. In addition to these, it has also invested in skills acquisition and entrepreneurship in these areas and across the nation.

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After an industry-wide electronic voting exercise, Seplat was said to have topped the category, the organisers said.

General Manager, External Affairs and Communications, Seplat Petroleum Development Company Plc, Dr. Chioma Nwachuku, who received the award on behalf of the company, lauded the organisers for the recognition accorded the Seplat brand, and pledged the company’s commitment to continue to impact lives positively through its CSR initiatives.

By Taofik Salako, Capital Market Editor

The Board of Directors of United Capital Plc has recommended distribution of N3 billion to shareholders as cash dividends for the 2019 business year. Shareholders will receive a dividend per share of 50 kobo.

The dividend recommendation was part of the highlights of the audited report and accounts of United Capital for the year ended December 31, 2019, which was released yesterday at the Nigerian Stock Exchange (NSE).

Key extracts of the report showed that turnover dropped from N9.26 billion in 2018 to N8.59 billion in 2019. Net operating income also declined from N7.21 billion to N7.05 billion. Profit before tax stood at N4.95 billion in 2019 compared with N6.22 billion in 2018. After taxes, net profit rose by 15 per cent from N4.34 billion to N4.97 billion. Earnings per share thus improved from 72 kobo in 2018 to 83 kobo in 2019.

The balance sheet of the investment banking group also improved marginally from N148.7 billion in 2018 to N150.46 billion in 2019. Total liabilities stood at N130.88 billion as against N132.86 billion in 2018 while shareholders’ fund rose by 23.7 per cent from N15.83 billion in 2018 to N19.59 billion in 2019.

The company attributed the decrease in turnover to decline in investment income, net trading income and other income due to low economic activities in the capital and money markets. However, the group recorded three per cent increase in fees and commission income which effectively reduced the impact of the decline in gross earnings.

The report showed that profit after tax margin improved to 58 per cent in 2019 compared with  47 per cent in 2018 on the back of the group’s strategic tax management leading to a deferred tax write back during the year.

Group Chief Executive Officer, United Capital Plc, Mr. Peter Ashade said United Capital remains a leader in the financial and investment services space, with a mission to provide bespoke and innovative value-added services to its clients.

He noted that in spite of the challenging operating environment that was experienced in 2019, the group has been able to consistently improve in its performance.

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According to him, the improvement in margin in 2019 was driven majorly by the growth in net interest margin, fees and commission as well as an efficient tax management strategy.

“We expect an appreciable growth in our revenue as we roll out our various strategic initiatives for the year 2020. Although, the revenue from Investment income, which is made up of income from fixed deposit and investment securities, reduced during the year under review, as a result of the persistent decline in interest rate experienced in 2019, we recorded an impressive performance in our businesses,” Ashade said.

He said the company would continue to consolidate on the key achievements recorded in 2019 in order to improve its business operations in 2020.

He outlined that the company recorded many milestones 2019 including securing a non-capital market license and setting-up consumer finance business which led to the launch of its USSD platform *5077# while it also emerged top five among peer fund managers in terms of mutual funds size.

He added that the group successfully repositioned its wealth management business on the path of profitability while it also registered a new business in Ghana in line with its Pan-Africa strategy.

“Going into the 2020 business year, our focus would be to execute our strategic imperatives targeted at strengthening our B2C model and scale up activities to drive growth across all subsidiaries, aggressively drive our AUM growth to sustainably increase annual fee income, as well as the establishment of innovative cost containment mechanisms through effective budgeting,” Ashade said.

Taofik Salako, Capital Market Editor

AFRICAN Export-Import Bank (Afreximbank) has floated a N300 billion domestic bond for the capital market.

The bond was established for Afreximbank by Stanbic IBTC Capital Limited, a subsidiary of the Stanbic IBTC Holdings Plc.

The signing, which held at Eko Hotel & Suites, Victoria Island, Lagos, marked the kick-off of the initiative.

Afreximbank, a multi-product partner of Stanbic IBTC and the Standard Bank Group, is one of Africa’s largest developmental finance institutions and a seasoned issuer in the international capital markets.

The establishment of the debt issuance programme in the capital market by Afreximbank makes it the third supranational ever to join an elite group of Nigeria’s development partners, enabling the domestic capital market.

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Parties to the issuance said it was vital to establish the bond programme in local currency, considering the strong liquidity and current low yields in the domestic market.

They noted that the initiative by Afreximbank aligns with global best practice in treasury management and innovation to stay abreast of evolving market conditions.

They stated that the N300 billion would stimulate the expansion and development of Nigeria, through the intervention in various sectors of the  economy.

Stanbic IBTC Capital reiterated its commitment to developing the capital markets noting that it has been at the forefront of driving financial innovation and advising clients on staying ahead of changing times.

The transaction was consummated in the presence of members of the Stanbic IBTC team, members of the Afreximbank executive management team, representatives from the Nigerian Stock Exchange and FMDQ OTC Plc among others.