Category: Investors

By Taofik Salako, Deputy Group Business Editor

Heineken B.V, the majority core investor in Nigerian Breweries Plc and Champion Breweries Plc, may soon launch a full takeover bid for minority shares in Champion Breweries after the global breweries giant closed a N4.95b deal to increase its majority equity stake in Champion Breweries to 84.97 per cent.

Transaction details and regulatory filings at the Nigerian Stock Exchange (NSE) showed that Heineken, through its wholly-owned Nigerian subsidiary, Raysun Nigeria Limited, acquired N4.95 billion shares from local investors to increase its controlling equity stake in the Akwa Ibom State-based Champion Breweries.

A total of 1.90 billion ordinary shares of 50 kobo each of Champion Breweries were crossed to Raysun Nigeria Limited at N2.60 per share through the negotiated window of the NSE. The new transaction represents 24.27 per cent of the issued share capital of Champion Breweries.

Prior to the latest acquisition, Heineken, through Raysun Nigeria Limited, held 60.7 per cent majority equity stake in Champion Breweries.  Akwa Ibom State held 10 per cent equity stake while other Nigerian shareholders held 29.3 per cent equity stake.

Market sources said the new transaction and increase in majority equity stake to 84.97 per cent may trigger the Mandatory Tender Offer (MTO) clause of the capital market and lead to free float deficiency.

Section 131 of the Investment and Securities Act (ISA) and Rule 445 of SEC make it mandatory for any institution or person that acquires at least 30 per cent of a company to make an MTO to other minority shareholders. The underlying reason is to allow other shareholders to determine or benefit from the value accretion of the transaction and avoid locking up minority shareholders at the convenience of major shareholders’ dealings.

MTO is traditionally made at the price of the underlying transaction that triggered the MTO.

Champion Breweries has 7.829 billion ordinary shares of 50 kobo each, with Heineken, through Raysun Nigeria, now holding some 6.652 billion ordinary shares of 50 kobo each, leaving about 1.177 billion shares in the hands of other shareholders.

Market pundits said the new transaction has created deeper free float deficiency for Champion Breweries.

Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any individual or institutional shareholder holding a statutorily significant stake, which is five per cent and above in Nigeria.

Under the rules at the NSE, Champion Breweries, which is quoted on the main board of the Exchange, is required to have a minimum free float of 20 per cent of its market capitalisation, implying that 20 per cent of the companies’ shareholdings must be available for minority retail shareholders.

Sources said there were indications that Heineken might consider delisting or merger to cure the free float deficiency and unlock further synergies.

Shareholders of Champion Breweries had earlier clamoured for the merging of the company with Nigerian Breweries in order to create synergies that could deliver greater values to all stakeholders.

They had cited the consolidation in the breweries sector which placed multiple-entities strategy in disadvantage with major investors such as SABMiller and Diageo consolidating their operations in Nigeria to create critical mass that can drive turnover in the increasingly competitive market.

Champion Breweries’ principal activities include contract brewing services to Nigerian Breweries as well as brewing and packaging of Champion Lager Beer and non-alcoholic Champ Malta.

By Kelvin Osa-Okunbor

The Federal Government has been asked to grant     tax exemption on handling equipment.

The Managing Director, Nigeria Aviation Handling Company (NAHCO) Plc,  Mrs. Tokunbo Fagbemi made the call at a briefing in Lagos.

She said the company received N70 million out of the N4billion bailout promised by  the Federal Government to cushion the effects of the pandemic on aviation.

Mrs. Fagbemi said if waivers were given on aircraft spare parts, ground support equipment should also enjoy the same gesture from the government.

She recalled that during the pandemic look down, the  Association of Ground Handlers of Nigeria applied for tax exemption on equipment similar to what is given to  aircraft.

The NAHCO boss said: “Because at the end of the day, these are ground support equipment.They support and handle the aircraft, so if the aircraft are given zero duty, why should we also not enjoy that kind of rebate? We will be happy if that is given.”

The NAHCOaviance chief said the company would be happy if the government could give it more palliatives in form of zero percent loans and other windows to help them to continue to support the airlines.

“We are also looking at tax, if there is some form of exemptions, we have taken some opportunities where FIRS say pay before a certain time, some we have not be able to because we are actually being reviewed and audited, all the yearly audits so, we have to been able to take a position on those that we have but we will like more particularly because of the peculiarity of this business that we are in.

“So, it is high cost in terms of equipment, the equipment do not have the same value like an aircraft has and there is a limited number of years that you can flog it for and then you still pay all these duties and charges, so if we even have exemptions on duties, it will go along way to help us to be able to do that.”

Commending the Federal Government for the cash, Mrs. Fagbemi said the company looked forward to more.

“Yes, we were given about N70 million but if you look at how much we lost, it is not much but anything that is given is something that we are grateful for because it is better to have something than you have nothing.

‘’But like Oliver Twist, as we are thanking the Ministry and the Federal Government, Central Bank of Nigeria (CBN) and the Minister of Finance, we are also hopeful that some more as we have told will be given to the ground handling companies,” she said.

Abbey Mortgage Bank Plc has opened acceptance list to raise about N3.03 billion new equity funds from its shareholders.

The mortgage financial institution is offering 3.69 billion ordinary shares of 50 kobo each at 82 kobo per share. The shares were pre-allotted on the basis of four new ordinary shares of 50 kobo each for every seven shares held as at October 8, 2020.

Acceptance list for the rights issue opened on Monday, January 4, 2021 and will run till Thursday, February 11, 2021.

Abbey Mortgage Bank had in February 2020 added N2.37 billion to its market capitalisation through the listing of 2.26 billion ordinary shares of 50 Kobo at N1.05 per share. The new shares arose from a private placement made to VFD Group Plc.

With the additional shares, the total issued and fully paid up shares of Abbey Mortgage Bank increased from 4.20 billion ordinary shares of 50 kobo each to 6.46 billion ordinary shares of 50 kobo each.

Central Securities Clearing System (CSCS) Plc has expressed optimism that the capital market will build on its resilience that shone brightly amid the pandemic in 2020 to consolidate its gains in the new business year.

Chief Executive Officer, Central Securities Clearing System (CSCS) Plc, Mr. Haruna Jalo-Waziri, said while 2020 was definitively historic and unprecedented as COVID-19 shook the world powers and tipped many economies into recession, the  capital market braced the odds to remain vibrant and active all through the year.

According to him, the combination of the efficiencies of the market systems including the CSCS and the collaboration of all stakeholders were responsible for the sterling performance of the Nigerian market during the period.

The Nigerian Stock Exchange (NSE) recorded its best performance in recent years in 2020 with average full-year return for quoted equities at 50.03 per cent or N6.48 trillion. CSCS, a capital market infrastructure company, is the clearing and settlement house for the NSE.

“For us at CSCS, just as I believe with many peers, we cannot afford the lessons of this crisis to go to waste. If none other, one pertinent lesson COVID-19 has taught us is the significance of our togetherness – the unimaginable strength of our collective resources and sincere collaboration for the stability and growth of the Nigerian capital market.  If COVID-19 is a living enemy, I am sure it has suffered defeat in the most shameful battle with Nigerian capital market, as the seamless operation of the market amidst the odds of the pandemic won great admiration, even from critics. As your market infrastructure, we are proud to be a part of this success and we do not take it for granted,” Jalo-Waziri said.

He outlined that the CSCS recorded several landmarks even during the crisis period noting that beyond sustaining and increasing market activity, CSCS was able to execute the regulatory directive on investor account update, partly integrated its technologies with the account opening portal and leveraged its “RegConnect” for enhanced data exchange for registrars’ services among other initiatives.

He urged all stakeholders to continue to work together for the progress of the Nigerian market adding that as resources were pooled to effectively navigate the odds of one of the most challenging times in history, all hands must be on deck to continue to collaborate on consolidating the gains and advancing mutual course of deepening the Nigerian capital market, through innovation and togetherness.

“We are super-excited at the prospect of this new year, banking on your continued patronage, and a renewed commitment to the collaboration that has brought us this far – a partnership of over two decades that has birthed mutual greatness and respect for our market and respective businesses; a life partnership that is so dear to our existence and which we will continue to jealously nurture and invest in. Together, we can do more, and together, we must achieve greater greatness,” Jalo-Waziri said.

He said the CSCS would in the new business year redouble efforts on its renewed strategic focus to listening and executing diligently and exigently on the market’s needs.

“In this new year and beyond, our pledge is to meet your anticipated needs and exceed your expectations. Our dedication is a reinforcement of the value we place on you, as your infrastructure for the Nigerian capital market. You are at the core of our essence, and more than ever, I am confident in the insuperable prowess of our collective resources and capabilities in surmounting any impediments to achieving our respective and mutual goals,” Jalo-Waziri said.

According to him, notwithstanding concerns of the second wave of the COVID-19 infection, there is reasonable optimism that this pandemic shall pass in no distant time, and people will once again be able to engage and interact more actively physically.

By Taofik Salako, Deputy Group Business Editor

President, Chartered Institute of Stockbrokers (CIS), Mr Olatunde Amolegbe has assured that the capital market remains one of the best, transparent and reliable opportunities for investors to save and grow their wealth.

Appraising the performance of the market amid the COVID-19 pandemic, Amolegbe said the capital market provided the silver lining for the economy in 2020 when most economic indicators turned red and various headwinds pushed the country into another round of economic recession in just five years.

He noted that the Nigerian Stock Exchange’s All Share Index achieved a full-year return of 50.03 per cent appreciation, making Nigeria the best performing stock market and investment destination in the world as acclaimed by many reliable global agencies.

He said the success of the market in 2020 was a clear result of the massive confidence in the market by investors, chartered stockbrokers, regulators and various trading platforms in the country.

“To our millions of local investors, I wish to use this opportunity to reassure them that the capital market, both equity and debt platforms, remains one of the best, transparent, and reliable outlets available to them for saving and income earning purposes. They should therefore return to the market with confidence, patronise stockbrokers for investment advice and eschew quacks,” Amolegbe said.

He advised local investors to take advantage of superior return on investment by increasing their investment in the capital market.

He said the CIS would soon review its membership rules and regulations to reflect the current market realities and emerging new roles of stockbrokers.

He however pointed out that the 50.03 per cent index performance does not tell the full story of 2020 as the coronavirus pandemic, which lasted throughout the year, and the more recent social upheavals that trailed the #EndSARs protests, combined to set the economy back by several trillions of naira, worsening the already fragile and precarious states of unemployment, foreign exchange rate and inflation in the country.

He commended the resilience of the stockbroking community throughout the challenging period noting that none of the challenges in 2020 prevented stockbrokers from meeting the expectations of their numerous clients, domiciled in Nigeria, Europe, America, and other parts of the world.

“It is on record that the Nigerian stockbroking community was one of the first to embrace the new order forced on the society by the coronavirus pandemic. The transition to full-blown technology-driven operations was immediate and seamless in the capital market. Dealers were trading remotely on a full time basis, new issues were done, and companies were paying dividends and bonuses to their clients as usual. The Chartered Institute of Stockbrokers (CIS) was a pace setter in the process, as we held our annual conference, presidential investiture and dozens of training programmes virtually and excellently, to the admiration of the rest of the world,” Amolegbe said.

He assured that 2021 would be even more remarkable and productive than the past year, urging stockbrokers to rally round their institute in implementing several laudable initiatives outlined for the year.

“The implementation of the new syllabus recently approved by council for our examination is expected to commence in 2021, while we hope to berth a new membership rule that will reflect the new market realities of the 21st century before the end of the year. Of course, tenacious efforts will intensify to see to the passage of various amendments to the CIS Act along with our partners.  2021 therefore is shaping up to be an interesting year for your Institute. I therefore call on you all to continue in the spirit of cooperation, creativity and support that you displayed in 2020,” Amolegbe said.

The International Organisation of Securities Commissions (IOSCO) has cautioned that crypto-assets carry risks that retail investors may not fully understand, increasing the chance of losses on investments in these assets.

IOSCO is the global body securities regulators and its members regulate more than 95 per cent of the world’s securities markets in 129 jurisdictions. Nigeria is a signatory to IOSCO and a member of IOSCO board.

The global securities regulatory body has published a report that seeks to help regulators inform retail investors about the risks and characteristics of crypto-assets.

The IOSCO report entitled: ‘Investor education on crypto-assets’ identifies an array of possible risks to investors, including such things as lack of market liquidity, volatility, partial or total loss of the invested amount, insufficient information disclosure and fraud.

The report describes methods that regulators can use to provide educational material to retail investors on the risks of investing in crypto-assets and offers four areas of guidance.  These include developing educational content about crypto-assets, informing the public about unlicensed or fraudulent firms,        using a various communication channels to inform investors and forming partnerships to develop and disseminate educational materials.

According to the global body, in recent years, IOSCO members have expressed concerns about the use of crypto-assets in areas ranging from trading, custody, clearing and settlement.

accounting, valuation, intermediation and investment funds. In response, the IOSCO board identified crypto-assets as one of its top work priorities for 2019 and 2020.

In January 2018, IOSCO issued a statement on concerns related to Initial Coin Offerings (ICOs),  noting the risks associated with ICOs, particularly regarding parties that target retail investors through online distribution channels, often from outside the investors’ home jurisdiction. Crypto-assets distributed in an ICO are highly risky investments and vulnerable to abuse and fraud.

In 2019, as the first step in developing the educational material, IOSCO´s Committee 8 on Retail Investors conducted a fact-finding survey of its members regarding crypto-assets. IOSCO acknowledges that not all of the report´s material or educational approaches may be appropriate for all member jurisdictions or consistent with all members’ legal and regulatory frameworks. Instead, it recommends that members adopt the material and educational approaches best suited to their respective jurisdictions.

IOSCO aims through its permanent structures to cooperate in developing, implementing and promoting internationally recognized and consistent standards of regulation, oversight and enforcement in order to protect investors, maintain fair, efficient and transparent markets, and seek to address systemic risks.

The body also seeks to enhance investor protection and promote investor confidence in the integrity of securities markets, through strengthened information exchange and cooperation in enforcement against misconduct and in supervision of markets and market intermediaries.

IOSCO also promotes exchange of information at both global and regional levels on their respective experiences in order to assist the development of markets, strengthen market infrastructure and implement appropriate regulation.

Nigerian equities are set for another record return as continuing bargain-hunting pushed average return so far in 2020 to 44.55 per cent, equivalent to net capital gains of N5.77 trillion. The recent highest return was 42.3 per cent recorded in 2017.

The All Share Index (ASI)- the value-based common index that tracks all share prices at the Nigerian Stock Exchange (NSE) opened yesterday at 38,800.01 points, 44.55 per cent above 26,842.07 points recorded as opening index for the year. The ASI had consolidated its rally with average gain of 5.42 per cent or net capital gain of N1.04 trillion in the four-day trading session last week.

Aggregate market value of all quoted equities at the NSE crossed the N20 trillion mark to open yesterday at N20.279 trillion as against N19.236 trillion recorded as opening value for last week. It had opened the year at N12.958 trillion.

Most market analysts said they expected the market to record further gains during this week, with strong indication that the bulls may ride over possible profit-taking transactions to push full-year return above the N6 trillion mark.

Nigerian equities traditionally play contrarian stocks during the last trading days of the year, reflecting the symbolic Santa Claus rally, a tendency for stock prices to go up in the week last week of the year mostly in anticipation of expected positioning for dividends by the first month of the New Year.

“As the year draws to a close, we expect yield-seeking investors to take positions in stocks with attractive dividend yields, in the face of increasingly negative real returns in the fixed income market. However, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings,” Cordros Securities said.

Analysts at Afrinvest Securities said they were “optimistic about a sustained positive run in the upcoming trading week”.

It was a four-day trading week as the Federal Government of Nigeria declared Friday 25th of December, 2020 as Public Holiday in commemoration of the Christmas Celebration.

Investors have stepped up activities in recent days with total turnover rising to 2.756 billion shares worth N40.311 billion in 17,459 deals last week as against a total of 1.893 billion shares valued at N17.647 billion traded in 20,660 deals two weeks ago.

The financial services sector led the activity chart with 2.106 billion shares valued at N19.454 billion traded in 8,327 deals; thus contributing 76.40 per cent and 48.26 per cent to the total equity turnover volume and value respectively. The consumer goods sector followed with 182.099 million shares worth N4.392 billion in 2,485 deals while the third place was industrial goods sector, with a turnover of 145.808 million shares worth N10.632 billion in 2,587 deals.

The three most active stocks were Access Bank Plc, Zenith Bank Plc and AXA Mansard Insurance Plc, which altogether accounted for 1.439 billion shares worth N13.881 billion in 2,972 deals, contributing 52.23 per cent and 34.44 per cent to the total equity turnover volume and value respectively.