The Nation Newspaper

Category: Investors

  • ‘High level of corporate governance key to attracting investors’

    By Chiamaka Onwuchekwa

    Firms with the highest corporate governance standards stand a better chance of attracting much-needed foreign investments from international investors.

    This was the highlight of a conference held in Lagos by the Convention on Business Integrity (CBI).

    The conference, which brought together academics, corporates, civil society leaders and media, offered the business community an opportunity to network towards inspiring corporate integrity and compliance practices.

    Addressing the forum, CBI Country Director Mr. Soji Apampa said companies with the highest standards of corporate governance would benefit most from rising foreign investments.

    He said there are massive opportunities in  frontier markets, and that businesses should put integrity at the heart of their operational approach.

    Apampa said there was need to have business integrity policies and practices in place that ensure compliance with the high standards.

    According to him, doing business with integrity generates direct business benefits from reputational gains and more competitive bids, and longer-term business sustainability.

    He added that professionalism, ethical practices and integrity form indispensable parts of business activities.

    The CBI Country Director expressed hope that following this forum, participants will strongly promote business integrity in the enterprises and sectors they represent, and together take actions to minimise and prevent business risks and avoid bribery and corruption in business transactions.

    Apampa said as Nigeria is fast integrating into the global and regional economy, the role of the business sector in preventing corruption was urgently important.

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    He said corruption puts a burden on the business sector’s expenses and destabilises enterprises.

    Apampa added that ethical violations in the business sector had eroded trust among investors, customers and employees.

    He, therefore, said it was high time Nigerians left the corruption perception index and face integrity building.

    The CBI director thanked United Bank for Africa (UBA), Action Aid, among other organisations, for funding and supporting CBI.

    Also speaking at the conference, the President, Lagos Chamber of Commerce, Mrs. Toki Mabogunje, said the biggest risk in doing business in Nigeria is regulatory risk.

    She said the regulatory environment was one of the biggest challenges being faced currently in business in the country.

    As  an  effective way of stamping out corruption, she urged businesses to foster a culture of integrity that goes beyond the remit of the compliance function.

  • ITC, UN partners launch facility to boost job creation

    Our Reporter

     

    The International Trade Centre (ITC) and partners of the United Nations (UN) Global Initiative on Decent Jobs for Youth have launched a joint Knowledge Facility to boost employment prospect of young people.

    ITC said the facility is a place for policymakers and practitioners to learn, share, and engage with youth employment themes through searchable and downloadable resources and tools.

    It builds on the work of existing knowledge platforms on youth employment, and maps and links resources and tools related to youth employment and allows users to manage knowledge of, and communicate about, youth employment interventions.

    “Our continued collaboration with the Global Initiative on Decent Jobs for Youth now features a new digital platform for young entrepreneurs and youth employment stakeholders alike,’ ITC Executive Director Arancha González said.

    The ITC boss added that “through knowledge sharing and providing access to relevant resources, we support young entrepreneurs in realising their business ideas.”

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    ITC has been part of the Global Initiative on Decent Jobs for Youth since its inauguration and continues to lead the thematic area on youth entrepreneurship.

    With the help of collaborative stakeholder action under the umbrella of the Global Initiative, ITC’s Youth & Trade Programme was able to create conversations and to generate results for young entrepreneurs across Africa and beyond.

    The UN Global Initiative on Decent Jobs for Youth is the multi-stakeholder alliance to scale up action and impact on youth employment under the 2030 Agenda for Sustainable Development.

    It brings together governments, social partners, youth and civil society organisations, the private sector, the UN System and others working together to share knowledge, leverage resources and take action at country and regional levels to support young people in accessing decent work and productive employment worldwide.

  • Group floats €15m seed fund for startups

    Our Reporter

     

    To help support and finance African start-ups, Agency Française de Développement (AFD) is launching a new €15 million seed fund.

    The group said it was launching the seed fund for African startups as part of Emerging Valley – a platform for emerging innovations and partnerships between Europe and Africa.

    The new Digital Africa seed fund, the group said, was also part of the Choose Africa initiative, through which AFD Group has committed to allocating €2.5 billion to African start-ups and SMEs by 2022.

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    AFD Group is an international French International agency that funds, supports and accelerates the transition to a fairer and more sustainable world.

    The fund will be accessible in 45 African countries, and will allow emerging start-ups to access financial support of up to €300,000 through AFD’s local partners.

  • Stock Exchange begins implementation of new free float rules

    By Taofik Salako, Capital Market Editor

     

    The Nigerian Stock Exchange (NSE) will begin implementation of its new free float rules as from the first working day in 2020.

    The NSE, which had suspended the implementation of the new rules on May 31, 2019, yesterday indicated that the new rules will now take effect on January 02, 2020. The new rules were initially scheduled to take effect on Monday June 3, 2019.

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) had approved the new rules on May 06, 2019.

    The new rules require quoted companies to indicate their shareholding structure and compliance level with the minimum number of shares or capitalisation being held by minority retail shareholders in their half-year reports.

    Under the existing rules, companies are only required to indicate shareholding structure in full-year report and are not under obligation to categorically indicate compliance with free float.

    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 single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

    The new rules, obtained by The Nation, indicate that companies shall also be required to undertake periodic self-assessment of their free float compliance and report any breach or shortfall to the Exchange.

    The new rules place the onus of investigation and compliance on the companies, in addition to existing surveillance by the capital market authorities.

    According to the amended rules, every company shall independently review its free float every half-year or other reasonable time, and when there is a breach of its free float requirement, disclose this to the Exchange and immediately initiate the steps to remedy the default and comply with its free float requirement.

    The amendment mandates the Exchange to commence the process of delisting any company that fails to respond to specific notice on free float default within 10 business days of receiving the notification or any company that fails to produce and submit an acceptable compliance plan to the Exchange within three months of being notified of falling short of free float under the Exchange’s periodic “X-Compliance Report”.

    The NSE is also expected to commence delisting process if the company’s compliance plan is not acceptable to the Exchange, and the company fails to produce and submit an acceptable alternative plan within 21 business days of the Exchange’s rejection of the initial plan.

    The NSE can also trigger the delisting process if the defaulting company is unable to return to a state of full compliance within such period as indicated in the company’s compliance plan approved by the Exchange.

    The amendment, in addition to existing percentage free float requirement, also provides the minimum number of minority retail shareholders and minimum capitalisation that can serve as alternative free float to percentage of shares.

    Under the existing rules, companies listed on the premium board are required to have 20 per cent free float or more than N40 billion of their capitalisation in the hands of general investing public.

    Companies on the main board are required to have a minimum free float of 20 per cent of their market capitalisation, implying that 20 per cent of the companies’ shareholdings must be available for minority retail shareholders. However, companies on the Alternative Securities Market (ASeM) are required to have 15 per cent free float.

    With the amendments, free float of companies on the premium and main boards must be held by not less than 300 shareholders while those on Alternative Securities Market (ASeM) must be held by not less than 51 shareholders.

    A new board, to be known as growth board, will have free float of between 10 to 15 per cent, which must be held by between 25 to 51 persons.

    The amendments introduced capitalisation method, which previously applied only to premium board, for the other boards. Minimum value of free float for companies on the main board is N20 billion while ASeM and growth board have alternative value of N50 million.

    The new rules, however, retain NSE’s prerogative to grant extension of time to any company to comply with the minimum free float requirements if the Exchange believes that the market can operate fairly and in an orderly manner with the company’s existing level of free float or the NSE has received an undertaking from a majority shareholder or many shareholders with at least five per cent shareholding to make available to the minority retail investing public a specific number of securities required to restore the company to the required free float level within such period as the Exchange may approve.

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    Stock markets maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation.

    Besides, it provides the general investing public with opportunity to reasonably partake in the wealth creation by private enterprises.

    Authorities at the NSE launched the review of the market’s free float requirement after an exclusive report by The Nation that several quoted companies had failed to meet the free float requirement.

     The Nation had reported that 18 quoted companies have less-than-required minimum volume of shares for public trading, a major infraction that may adversely affect liquidity and efficient price discovery on the companies.

    The overconcentration easily makes the companies’ share prices susceptible to manipulation and detracts from stock market’s objectives of wealth distribution, liquidity and efficient pricing.

    According to the report, the defaulting companies included Union Bank of Nigeria, which currently has a free float of 14.94 per cent; Capital Hotel, 2.99 per cent; Great Nigerian Insurance, 16.0 per cent; AG Leventis, 11.64 per cent; Interlinked Technology, 14.50 per cent; Infinity Trust Mortgage, 3.50 per cent; Transcorp Hotels, 6.0 per cent; Ekocorp, 11.84 per cent; Champion Breweries, 17.17 per cent; Caverton Offshore Support Group, 17.30 per cent; The Tourist Company of Nigeria Plc, 3.58 per cent and E-Tranzact International Plc, which has a free float of 10.06 per cent.

    Others were Aluminium Extrusion, 17.73 per cent; Union Dicon Salt, 18.0 per cent; Austin Laz & Company, 5.51 per cent; CWG, 15.97 per cent; Global Spectrum Energy Services, 7.01 per cent and Portland Paints & Product Nigeria (PPPN), which has a free float of 14.57 per cent, 5.43 percentage points below the 20 per cent minimum requirement.

  • AfDB approves N1.5b grant for Elumelu’s entrepreneurship programme

    By Taofik Salako, Capital Market Editor

     

    The board of African Development Bank (AfDB) has approved a grant of $5 million, more than N1.5 billion, to support Tony Elumelu Foundation (TEF) Entrepreneurship Programme in scaling up its outreach and impact to 1,000 select youth entrepreneurs.

    The grant followed the signing of a letter of intent between the bank and the Tony Elumelu Foundation, which took place during the Tony Elumelu Foundation Entrepreneurship Programme launch in March this year.

    The partnership is expected to bring about future collaboration focused on strengthening small to medium-sized enterprises as well as talent and skills development for Africa’s youth

    The partnership will support 3,050 young entrepreneurs across 54 African countries. The bank’s participation will enable an additional 1,000 entrepreneurs to benefit from the Tony Elumelu Entrepreneurship Program, which provides much needed opportunities to help stem the rising tide of unemployment and inequality facing the continent’s youngest citizens.

    In a statement, AfDB stated that the programme aligns with its 10-year Jobs for Youth in Africa strategy launched in 2016, to support the creation of 25 million decent jobs across the continent.

    The Jobs for Youth in Africa strategy is also expected to equip 50 million young African people with employable skills that enable them to access economic opportunities and realize their full economic potential across the continent.

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    The Tony Elumelu Foundation Entrepreneurship Programme will deliver business training, mentoring, access to networks, markets and capital for business development to selected youth-led start-ups in order for them to grow and create jobs.

    According to the bank, the TEF programme has a strong alignment with its youth entrepreneurship and innovation multi-donor trust fund, which seeks to build the African youth entrepreneurship ecosystem by scaling innovative youth-led start-ups, expanding youth market opportunities and improving youth access to finance.

    Other development partners involved in supporting the Tony Elumelu Entrepreneurship Programme are Agence Française de Développement, the German Agency for International Cooperation, the United Nations Development Programme and the International Committee of the Red Cross.

    They will also work to provide more business opportunities to youth entrepreneurs across the continent.

    In 2017, AfDB established the Youth Entrepreneurship and Innovation Multi-Donor Trust Fund, in partnership with the governments of Norway, Denmark, Sweden, Italy and the Netherlands.

    The fund is a grant vehicle managed by the bank to support the African entrepreneurship ecosystem directly and indirectly by leveraging on the Bank’s instruments.

    Its interventions will equip Africa’s youth with the right tools to establish start-ups and micro, small and medium enterprises.

     

  • Vitafoam Nigeria’s board meets on dividend

    By Taofik Salako, Capital Market Editor

     

    The board of Vitafoam Nigeria Plc will meet tomorrow to consider the appropriate dividend to be paid to investors for the 2019 business year.

    The foam-manufacturing company had paid a dividend per share of 25 kobo and a bonus increase of 25 per cent in shareholders’ holdings.

    Regulatory filing indicated that directors of Vitafoam Nigeria will at the meeting tomorrow undertake final review and approve the company’s audited report and accounts for the year ended September 30, 2019. The board will then simultaneously consider dividend payment.

    Under the rules at the Nigerian Stock Exchange (NSE), the board is expected to announce its decision before the weekend.

    Most analysts expected Vitafoam Nigeria to declare dividend, citing its traditional strength of consecutive dividend payment for many decades.

    Dividend payout may also not be below the 25 kobo per share paid for the 2018 business year, despite the 25 per cent increase in outstanding shares due to bonus shares distributed to shareholders in 2018.

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    Vitafoam Nigeria’s net profit had risen by 121 per cent to N1.14 billion by the third quarter as increased market penetration, diversified product base and improved internal efficiency brought the company to its best performance in recent period.

    By the third quarter ended June 30, 2019, Vitafoam Nigeria’s earnings per share stood at 107.66 kobo in 2019 compared with 48.83 kobo recorded in comparable period of 2018.

    Profit after tax had jumped from N515.2 million in 2018 to N1.14 billion in 2019. The report showed impressive top-down growth as turnover rose from N16 billion to N18.82 billion. Gross profit increased from N4.75 billion to N5.97 billion.

    Operating profit rose from N1.67 billion to N2.38 billion. Profit before tax leapt from N788.4 million in 2018 to N1.66 billion in 2019.

    Vitafoam Nigeria had distributed N260.51 million as cash dividend and a scrip dividend of one share for five shares for the 2018 business year. This represented a dividend per share of 25 kobo, in addition to bonus share of one new ordinary share of 50 kobo each for every five ordinary shares of 50 kobo each.

     

  • C & I Leasing probes Ghana subsidiary over financial error

    By Taofik Salako, Capital Market Editor

     

    C & I Leasing Africa Plc has launched special investigation to unravel the causes and the exact amount of a financial error in the audited accounts of its Ghana subsidiary, Leasafric Ghana Limited (Leasafric). Leasafric Ghana accounts for 10 per cent of the C & I Leasing Group’s financial performance.

    The board of C & I Leasing stated that Leasafric Ghana had informed the parent company of likely financial error in its audited accounts. The board stated that ongoing investigations will unravel the circumstances surrounding the likely errors in the audited accounts.

    C & I Leasing holds the majority 71 per cent equity stake in Leasafric, a non-bank financial institution incorporated in Ghana in 1992 to undertake finance leasing as its principal business.

    The company stated that while the exact amount to be written off will be determined by ongoing investigations, there could be likely impact on its group’s profit target for 2019.

    According to the company, in spite of the likely impact on profit target for 2019, exceptional track record in major sectors of the economy will cushion any effect going forward and it expects to meet its profit targets for 2020 and beyond.

    C & I Leasing assured stakeholders and the investing public that it remains resilient and well diversified to cushion any likely impact of the financial error.

    “The company has also begun putting adequate measures in place and strengthening its existing risk controls framework to prevent a recurrence,” C & I Leasing stated.

    The company noted that the detection of the financial error was as a result of the effective implementation of its robust corporate governance framework which is closely monitored by the board, adding that it remains committed to ensuring the continued full and effective implementation of the framework.

    The financial scandal came as C & I Leasing opened application for a N3.23 billion rights issue. The board of the company, however, stated that it did not envisage that the financial error will have any material impact on the rights issue.

    C & I Leasing is seeking to raise N3.23 billion from existing shareholders through a rights issue of 539 million ordinary shares of 50 kobo each at N6 per share.

    The rights were pre-allotted on the basis of four new ordinary shares of 50 kobo each for every three ordinary shares of 50 kobo each held as at the close of business on Wednesday, September 04, 2019.

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    Application list for the rights issue opened on Monday November 18, 2019 and will close on Friday, December 27, 2019.

    The company would use the net proceeds of the offer to bolster its working capital and increase leasing assets.

    AbraaJ Investment Management Limited (AIML), which had secured approval to convert its $10 million loan in C & I Leasing to equities in the Nigerian leasing company, and thus became a majority shareholder, has indicated that it will not be picking its rights.

    Renounced rights are usually sold through trading on the Nigerian Stock Exchange (NSE) or through pro rata allocation to other shareholders that demand for additional shares.

    C & I Leasing had in January 2019 concluded a massive share reconstruction that saw cancellation of 1.479 billion ordinary shares of 50 kobo each, about 79 per cent of the company’s pre-consolidation issued share capital.

    The share capital reconstruction had reduced the leasing company’s outstanding shares from 1.883 billion ordinary shares of 50 kobo each to new total outstanding ordinary shares of 404.25 million ordinary shares of 50 Kobo each.

    Under the share consolidation, four ordinary shares of 50 kobo each were consolidated into one ordinary share of 50 kobo each.

    The company had stated that the purpose of the reconstruction was to allow the company to have enough unissued shares to accommodate the conversion of the Abraaj loan stock to ordinary shares and to raise additional capital through the capital market for business expansion.

  • Regulators move to reduce conflict of interest in debt issuance

    By Taofik Salako, Capital Market Editor

     

    The board of International Organisation of Securities Commissions (IOSCO) has begun public exposure on proposed guidance to help IOSCO members address potential conflicts of interest and associated conduct risks arising from the role of market intermediaries in the debt capital raising process.

    IOSCO is the global body of securities regulators and its members regulate more than 95 per cent of the world’s securities markets in more than 115 jurisdictions. Nigeria is a first-class member of IOSCO, having served on its board.

    IOSCO yesterday stated that conflicts of interest and associated conduct risks can weaken investor confidence and undermine debt capital markets as an effective vehicle for issuers to raise funding.

    To help regulators identify and address these risks, IOSCO yesterday published the consultation report conflicts of interest and associated conduct risks during the debt capital raising process.

    Among other things, the consultation seeks public comments on the use of distributed ledger technology (DLT) in bond issuances and the potential benefits and risks of using this technology, including for managing conflicts of interest.

    The report describes the key stages of the debt raising process where the role of intermediaries might give rise to conflicts of interest.

    The proposed guidance comprises of eight measures grouped according to three key aspects of the debt raising process including pricing of debt securities and risk management transactions, quality of available information to investors and allocations of debt securities.

    “While the guidance focuses on traditional corporate bonds, it may prove useful to IOSCO members considering raising capital through other types of debt securities,” IOSCO stated.

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    According to IOSCO, the guidance was the second part of a two-stage project on conflicts of interest in capital raising.

    The first stage focused on the equity capital raising process with the final report conflicts of interest and associated conduct risks during the equity capital raising process published in September 2018.

    As a global body of securities regulator, IOSCO brings regulators together 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.

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

     

  • Red Star Express’ N1.35b rights issue closes

    By Taofik Salako, Capital Market Editor

     

    Application list for the N1.35 billion rights issue by Red Star Express Plc closes today. The rights issue had opened on November 11, 2019.

    This implies that shareholders have a deadline of the close of business today to pick up their pre-allotted shares.

    Red Star Express is raising N1.35 billion through rights issue of 336.86 million ordinary shares of 50 kobo each at N4 per share.

    The rights issue was pre-allotted on the basis of four new ordinary shares for every seven ordinary shares held as at the close of business on Wednesday August 21, 2019.

    The company has indicated that the net proceeds of the rights issue, estimated at N1.31 billion, will be used to finance expansion of its operations, deployment of improved technology and increase in working capital.

    A breakdown showed that the company plans to spend N704 million to develop warehouse facilities on the Lagos-Ibadan Expressway and at the Murtala Muhammed International Airport Cargo Terminal.

    It will use N201.65 million to purchase trucks. Also, a total of N154.29 million will be used to improve the group’s information and communication technology (ICT) and Enterprise Resource Planning Solution while the balance of N250 million will serve as additional working capital.

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    Chairman, Red Star Express Plc, Alhaji Suleiman Barau, said the success of the rights issue would enable the company to implement key initiatives that will enhance its ability to achieve sustainable growth and value creation for all shareholders.

    “By accepting your rights, you will be reinforcing your support for Red Star to explore new opportunities required to enhance the company’s ability to achieve sustainable growth and value creation for all shareholders,” Barau, a former Deputy Governor of Central Bank of Nigeria (CBN), said.

    Red Star Express has three subsidiaries – Red Star Freight Limited; Red Star Logistics Limited and Red Star Support Services Limited, as well as Red Star Express, a licensee of FedEx, world’s leading air express company with over 650 aircrafts and more than 270 delivery destinations globally.

    FedEx has consistently been rated among the top 10 most admired companies in the world over the past 10 years.

     

  • Investors await Vitafoam Nigeria’s dividend as directors meet

    By Taofik Salako, Capital Market Editor

     

    Nigeria’s leading foam manufacturing company, Vitafoam Nigeria Plc, may announce its dividend payout next week. Dividend payment is one of the top agenda at the board meeting of the company scheduled for next week.

    Directors are expected undertake final review and approve the company’s audited report and accounts for the year ended September 30, 2019. The board will then simultaneously consider dividend payment.

    Most pundits expect Vitafoam Nigeria to declare dividend, sustaining a long-running tradition of consecutive dividend paymentover many decades.

    Analysts also almost agreed that dividend payout for the 2019 business year may not be below 25 kobo per share paid for the 2018 business year, despite the 25 per cent increase in outstanding shares due to bonus shares distributed to shareholders in 2018.

    Vitafoam Nigeria’s net profit had risen by 121 per cent to N1.14 billion by the third quarter as increased market penetration, diversified product base and improved internal efficiency brought the company to its best performance in recent period.

    By the third quarter ended June 30, 2019, Vitafoam Nigeria’s earnings per share stood at 107.66 kobo in  2019 compared with 48.83 kobo recorded in comparable period of 2018. Profit after tax had jumped from N515.2 million in 2018 to N1.14 billion in 2019.

    The report showed impressive top-down growth as turnover rose from N16 billion to N18.82 billion. Gross profit increased from N4.75 billion to N5.97 billion. Operating profit rose from N1.67 billion to N2.38 billion.

    Profit before tax leapt from N788.4 million in 2018 to N1.66 billion in 2019.

    Vitafoam Nigeria had distributed N260.51 million as cash dividend and a scrip dividend of one share for five shares for the 2018 business year.

    This represented a dividend per share of 25 kobo, in addition to bonus share of one new ordinary share of 50 kobo each for every five ordinary shares of 50 kobo each.

    Vitafoam Nigeria had started the immediate past business year with significant growths across key performance indicators.

    Key extracts of the interim report and accounts for the three-month period ended December 31, 2018 had shown that turnover rose by 26.3 per cent while profits before and after tax doubled by 98.48 per cent and 123.14 per cent respectively.

    Group turnover stood at N6.38 billion in December 2018 as against N5.05 billion recorded in comparable period of 2017.

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    Profit before tax rose from N258.53 million to N513.12 million while profit after tax jumped from N162.17 million to N361.87 million.

    Earnings per share also increased from 13 kobo by December 2017 to 33 kobo in December 2018.

    Group Managing Director, Vitafoam Nigeria Plc, Mr Taiwo Adeniyi, has said consistent growths in key performance indicators in successive results provide basis for assurance that the company will be able to surpass its previous performance in the current business year.

    He noted that the first quarter results for the current business year had shown the direction of the group’s business.

    Adeniyi said the group’s Nigerian businesses are on a stronger footing while three of its seven subsidiaries have started to generate profit.

    He said the company will continue to innovate and develop products that will keep it ahead of competition and enable it to grow its turnover while extracting better values for shareholders.

    Chairman, Vitafoam Nigeria Plc, Dr Bamidele Makanjuola, said the growth in turnover and profitability reflected the robustness and fundamental strength of the group’s business.

    According to him, the company had taken strategic decision and reengineered its business with special focus on products quality, innovation, market differentiation, customer service and consumer education.

    “These efforts underscored our long-term priorities of growing revenue, controlling operating costs, and driving higher gross margins. I am pleased to report that we made great strides in cost containment and sustained positive trends in gross margins,” Makanjuola said.