The Nation Newspaper

Tag: foreign investors

  • Foreign investors acquire Fan Milk

    Two new foreign investors-Danone and The Abraaj Group have acquired 100 per cent equity stake in Fan Milk International, the parent company of Fan Milk Plc in a global deal that will reverberate in Nigeria and other West African countries.

    With 2012 sales of around EUR120 million, Fan Milk is the leading manufacturer and distributor of frozen dairy products and juices in Nigeria and other West African countries including Ghana, Togo, Burkina Faso, Benin and Ivory Coast. Since its establishment over 50 years ago, Fan Milk has grown rapidly through a unique distribution network with its products popularly available in almost every nooks and crannies of Nigeria.

    Stanbic IBTC Capital Limited advised Danone, one of the largest food product manufacturers in the world, producing fresh dairy, water and nutritional products globally, in the deal. The Abraaj Group is a leading private equity investor operating in the growth markets of Africa, Latin America, Middle East, South Asia, South East Asia, Turkey and Central Asia.

    Under the transaction, The Abraaj Group, which had previously announced its agreement to acquire 100 per cent of Fan Milk through one of its Funds in June 2013, will now acquire 51 per cent equity stake while Danone will acquire 49 per cent stake in Fan Milk International. However, Danone will in the years ahead be able to gradually acquire a controlling stake in the business.

    There is expectation that the combination of Danone’s know-how in the fresh dairy category alongside Abraaj’s 20 year investment experience, insights and local presence on the African continent will boost Fan Milk’s growth.

    Founder and group chief executive, The Abraaj Group, Arif Naqvi, noted that the acquisition of Fan Milk represented the largest fast moving consumer good (FMCG) private equity transaction in Sub Saharan Africa, outside South Africa.

    “We look forward to partnering with Danone in order to accelerate the growth and penetration of Fan Milk’s portfolio of leading consumer food brands across West Africa,” Naqvi said.

    Co Chief Operating Officer, Danone, Emmanuel Faber, said the transaction represented a major step in Danone’s expansion in Africa noting that Fan Milk is a company with a unique business model driven by a neighborhood sales and distribution platform.

    According to him, Danone, which is already in North and South Africa, will now be able to develop the dairy product market in West Africa.

    Chief executive officer, Stanbic IBTC Holdings Plc, Mrs. Sola David-Borha, said the deal was another step towards Stanbic IBTC’s goal of becoming the leading financial solutions provider in Nigeria differentiated by its quality and range of knowledge across segments.

    According to her, the acquisition highlights investors’ increasing appetite for Africa and its consumer brands as well as Stanbic IBTC’s consistent objective to help its clients achieve their goals.

    Head, financial advisory, Stanbic IBTC Capital, Fola Aiyesimoju said advising on such a high profile transaction demonstrated the merger and acquisition expertise within Stanbic IBTC Capital and the broader Standard Bank Group.

    “It is in line with our commitment to take Africa to the world and bring the world to Africa,” Aiyesimoju said.

     

  • Foreign investors stake N747b on Nigerian equities in eight months

    Foreign investors staked N747.23 billion on Nigerian equities within the first eight months of this year, accounting for about 51 per cent of the total market turnover during the period.

    The latest report on the foreign portfolio investment low by the Nigerian Stock Exchange (NSE) showed that foreign investors dominated transactions at the NSE in five out of the eight months, although the quantum of flow has reduced successively in recent months.

    The report indicated that total transaction at the NSE within the period stood at N1.47 trillion, with foreign portfolio investors accounting for N747.23 billion while domestic investors accounted for N721.60 billion. Foreign portfolio investors thus accounted for 50.87 per cent while domestic investors accounted for 49.13 per cent within the eight-month period.

    Investment flow in the past three tracked months has followed the same pattern, with more outflow than inflow. The foreign portfolio investment report showed considerable month-on-month slowdown in both the total foreign transactions and foreign portfolio inflow while there was an increase in outflow during the period.

    In August, foreign inflow stood at N31.12 billion as against outflow of N39.76 billion. Total foreign transactions thus stood at N70.88 billion, 52.26 per cent of the total turnover of N135.63 billion recorded for the month.

    Foreign investors had took out nearly a double of every penny they invested in the Nigerian stock market in July, unusually high disparity between foreign portfolio inflow and outflow, which led to significant decline in net foreign investment in the Nigerian stock market.

    The seven-month report for the period ended July 2013 had indicated that total foreign inflow stood at N31.81 billion as against outflow of N61.90 billion in July, showing the widest divergence between inflow and outflow so far this year.

    Total foreign transactions thus slowed to N93.71 billion in July as against N150.24 billion in the previous month. However, foreign investors remained dominant in stock market’s transactions with 62.53 per cent of the aggregate foreign-domestic transactions in July, an increase on 51.13 per cent recorded by foreign investors in June.

    With the outflow in July, net foreign investment declined from about N73 billion by June to N42.59 billion by July.

    Total foreign inflow had risen to N90.15 billion while outflow stood at N60.09 billion as total foreign transactions increased to N150.24 billion in June.

    Total foreign transactions in the Nigerian market for the seven-month period stood at N676.25 billion, 50.73 per cent of aggregate transactions of N1.33 trillion by foreign and domestic investors during the period. Breakdown of foreign transactions during the seven-month period showed inflow of N359.47 billion as against outflow of N316.88 billion. Nigerian investors accounted for N656.85 billion over the seven months.

    Foreign investors had capitalised on general market optimism in July ahead of the release of the first half earnings reports of quoted companies to monetize and rebalance their portfolios. Nigerian equities had consolidated their bullish rally in July with capital gains of some N581 billion. Aggregate market value of all equities closed July at N12.007 trillion as against its opening value of N11.426 trillion for the month. The All Share Index (ASI), which doubles as benchmark index for all equities on the Nigerian Stock Exchange (NSE) and country index for Nigeria, also rose from month’s opening index of 36,164.31 points to close at 37,914.33 points, a month-month average positive return of 5.08 per cent.

    First-half report on foreign portfolio investment flow had shown that total transactions-including buy and sell deals, by foreign investors totaled N582.64 billion, accounting for 49.24 per cent of total turnover at the NSE during the period.

    The report had indicated that in most instances, foreign investors flowed in more funds than they took out, leaving the stock market with a positive net foreign investment of about N73 billion within the period. Foreign portfolio inflow stood at N327.66 billion as against outflow of N254.98 billion.

    Total turnover value at the NSE during the first half was N1.18 trillion with both foreign investors and domestic investors dominating transactions in three months each. But while foreign investors had maintained gradual and steady increase and decline in portfolio adjustments, Nigerian investors showed large fluctuations.

    Nigerian investors dominated the market within the first two months and were supplanted by foreign investors in March and April. Nigerian investors regained dominance in May and were equally displaced by foreign investors in June.

    Foreign investors accounted for 36.89 per cent, 39.65 per cent, 52.78 per cent, 64.48 per cent, 48.68 per cent and 51.13 per cent in January, February, March, April, May and June respectively.

    Portfolio transactions by foreign investors totaled N61.46 billion, N75.97 billion, N80.14 billion, N122.97 billion, N91.86 billion and N150.24 billion in January, February, March, April, May and June respectively.

     

     

     

     

     

     

    The report underlined the structural outline of Nigerian investors, which was largely skewed in favour of institutional investors. For instance, institutional Nigerian investors accounted for 66.7 per cent or N95.78 billion of domestic investors’ turnover in June 2013 while retail investors contributed 33.3 per cent or N47.81 billion.

    The report had shown stronger momentum in foreign portfolio investments in the stock market as the 2013 first half report was substantially above six-month average over the past five years.

    Foreign investors staked about N4.08 trillion on quoted shares on the NSE between 2007 and 2012. Foreign investors had gradually and consecutively increased their investments in Nigerian equities from about 15 per cent of total market turnover in 2007 all through till a high of about 67 per cent in 2011.

    Foreign portfolios were particularly the main drivers of transactions on the NSE in the past two years, with foreign investors accounting for average of two-thirds of equity transactions between 2011 and 2012.

    The report underlined the early positioning of the foreign investors, who had saw through the prospects of Nigerian equities amidst the downtrend and the rampant herd instinct of the domestic investors, who mostly usually look at recovering market.

    Foreign portfolio transactions increased from N615.6 billion in 2007 to N787.4 billion in 2008. These trimmed down to N424.6 billion in 2009 before rising consecutively to N577.3 billion and N847.9 billion in 2010 and 2011 respectively. Foreign portfolio trades stood at N808.4 billion in 2012. With these, the two-way flow of foreign portfolio investments showed that while foreign investors flowed in about N2.01 trillion during the period, they equally took away about N2.17 trillion.

    Market pundits said the investment flows at the stock market might underline concerns over the future earnings of banks, following a generally low fundamental performance in the first half. Most banks reported marginal growth in profit in the first half as they struggled with reduced income streams and high cost of funds and operations induced by new regulations by the Central Bank of Nigeria (CBN).

    Banks remain the dominant subsector at the NSE, although reduction in number of quoted banks and increased capitalisation of non-bank multinationals have reduced the hitherto overbearing influence of banking stocks on overall market situation.

    Managing director, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the overall market situation at the stock market might not be unconnected with concerns over future earnings of banks given that banks have been the dominant stocks at the market.

    He said the lukewarm operational earnings of banks will reflect on their share prices as investors priced in expected muted performance into banks’ valuations.

    “There are actually 31 stocks that have been driving the market this year, banks account for 15 of these 31 stocks. So, if banks’ prices begin to go down, you are going to see decline in market performance and I think that is what we are seeing in the recent past,” Chukwu said.

     

     

     

     

  • Govt offers foreign investors visa on arrival

    Govt offers foreign investors visa on arrival

    The Federal Government is offering investors visa on arrival as one of the measures aimed at boosting the number of tourists and businessmen coming into the country.

    Minister of Culture, Tourism and National Orientation Edem Duke, announced this yesterday in Lagos, at a press conference by United States Franchise Trade Delegation to Nigeria.

    The US Commercial Service, in partnership with the International Franchise Association(IFA)and Franchise Times hosted the trade mission.

    He said Nigeria has transformed into one of the most popular business destinations in the world, adding that the trend was likely to continue as a greater number of towns see an increasing number of investors and tourists.

    He said government was offering visa on arrival to foreign investors ready to take advantage of business opportunities.

    To this end, he said the government will continue to improve on infrastructure for foreign guests.

    On the prospects of the trade mission, the minister said a number of international hotel groups and tour operators have decided to take their business to the country.

  • Foreign investors repatriate N38b dividends

    Foreign investors repatriate N38b dividends

    Foreign core investors in Nigeria’s major quoted companies earned about N38 billion as cash dividends in the immediate past business year as improved earnings enabled several companies to increase cash payouts to shareholders.

    The Nation’s Market Intelligence Report indicates that foreign majority shareholders with almost controlling stakes in 20 quoted companies received 55.4 per cent of the total cash dividends declared by the companies for the immediate past year ended 2012.

    Total dividend payouts by the 20 companies for the 2012 business year amounted to about N68.3 billion, out of which foreign core investors received about N37.81 billion, The Nation’s report has shown.

    With the exception of GlaxoSmithKline Consumer Nigeria, Sterling Bank and Julius Berger Nigeria Plc, which hold less than majority shareholdings, other foreign investors hold more than 50 per cent controlling majority equity stakes.

    Also, with the exception of some three companies, all the companies operate the 12-month Gregorian calendar as their business year, with the latest year end as December 31, last year.

    The foreign investors are spread across dominant sectors of the economy with large concentration in the fast moving consumer goods (FMCGs) sector. These major multinationals include Unilever Plc, GlaxoSmithKline, United Kingdom (GSK UK) Plc, PZ Cussons, Nestle SA, Lafarge SA, Heineken NV, Mondelçz International, Berger Bilfinger, BOC Holdings, Standard Bank Group, Leventis, Total SA, Mobil Oil Corporation, Siat nv, Affelka SA, State Bank of India and Greif International Holdings B.V.

    Cash dividend in the Nigerian market is subject to a 10 per cent withholding tax, implying that N3.78 billion would be deducted from the foreign investors’ dividends, leaving them with net dividends of N34.03 billion.

    Nestle SA, which holds 62.3 per cent in Nestle Nigeria Plc, earned about N9.95 billion in cash dividends for the 2012 business year out of a total of N15.85 billion declared by the company. Unilever, United Kingdom Plc; with 50.04 per cent stake in Unilever Nigeria, received about N2.65 billion, the same amount it had received in the previous year. GlaxoSmithKline UK Plc, which holds 46.4 per cent stake in GlaxoSmithKline Consumer Nigeria Plc, received N577.7 million out of total dividends of about N1.25 billion. GSK UK on Tuesday withdrew its bid to acquire additional equities to increase its controlling equity to 75 per cent.

    Another United Kingdom’s core investor, PZ Cussons got N1.18 billion out of total payouts of N1.71 billion. Also, Mondelçz International, which owns 74.99 per cent equity stake in Cadbury Nigeria through its acquisition of Cadbury Schweppes UK, recorded its first payout of N1.18 billion from gross dividend of N1.57 billion. BOC Holdings, which holds 60 per cent equity stake in BOC Gases Nigeria Plc received about N49.95 million from the gross dividend of N83.25 million. Leventis, one of Nigeria’s oldest foreign investors and majority shareholder in AG Leventis (Nigeria) Plc; where it holds about 88 per cent, received N326.15 million out of total dividend of N370.62 million. AFFELKA SA, which holds 72.2 per cent equity stake in Seven-Up Bottling Company Plc, received N924.2 million cash dividends out of gross dividend of N1.28 billion.

    In the banking sector, South Africa’s Standard Bank Group, which holds about 50.8 per cent in Stanbic IBTC Holdings, received N508 million as cash dividends out of a total payout of N1 billion. Also, the main foreign investor in Sterling Bank Plc, State Bank of India, received N370.95 million for its 11.81 per cent equity stake in the Nigerian bank. Sterling Bank paid a gross dividend of N3.14 billion.

    In the construction sector, Bilfinger Berger AG that holds less-than-majority controlling stake of 39.87 per cent in Julius Berger Nigeria Plc received cash dividend of N1.20 billion from the company’s total dividend of N3 billion. France’s Lafarge SA, the largest foreign core investor in Nigerian cement industry, received N2.16 billion from its 60 per cent stake in Lafarge Cement Wapco Nigeria and N472.17 million from its 50.2 per cent equity stake in Ashaka Cement. Lafarge Cemen Wapco Nigeria distributed gross dividend of N3.60 billion while Ashaka Cement paid out a total of N940.57 million for the 2012 business year.

    In the petroleum sector, France’s Total SA and Elf Acquitane, the foreign investors in Total Nigeria Plc received, altogether received N1.68 billion from the Nigerian subsidiary’s gross payout of N2.72 billion. United States’ Exxon Mobil Oil Corporation that holds 60 per cent equity stake in Mobil Oil Nigeria Plc earned about N1.08 billion from total dividend of N1.80 billion. In the breweries subsector, Heineken NV, the major foreign investor in Nigerian Breweries, received a whooping N12.27 billion for its 54.1 per cent equity stake. Nigerian Breweries distributed a total of N22.69 billion as dividends for 2012. The foreign investor in International Breweries will receive N533.59 million from total recommended dividend of N815.63 million as shareholders meet to consider board’s proposals.

    In the agriculture sector, Belgium’s sa Siat nv, which holds 60 per cent equity in Presco Plc got N600 million from the company’s total payout of N1 billion.

    In the packaging subsector, Greif International Holdings B.V, which holds 51 per cent equity stake in Greif Nigeria, received N6.52 million out of N12.79 million paid by the small-cap company.

    Also, the foreign core investor in Beta Glass received N102.1 million for its 60.05 per cent equity stake. Beta Glass paid N170 million as total dividends for the year.

    The Nigerian capital market has large foreign investments and it is considered as one of the most attractive emerging markets for above-average returns. Besides block shareholdings by foreign core investors, foreign portfolio investors account for nearly half of total market turnover at the stock market.

    According to recent report on foreign portfolio investment by the Nigerian Stock Exchange, foreign investors, which had dominated the market in the previous two months, reduced their total proportionate contribution to trades at the stock market to 48.68 per cent in May, down from 64.48 per cent in April.

    The report showed that foreign portfolio inflows stood at N45.73 billion while foreign portfolio outflows rose to N46.13 billion, leaving a negative of N0.4 billion.

    The earlier four-month report ended April 2013 had shown renewed interests by foreign investors. The report had indicated that while investments from Nigerian investors had slowed considerably since January, foreign investors had gradually increased their stakes. Foreign investors accounted for 64.48 per cent of total transaction value at the NSE in April as against 52.78 per cent they recorded in March when they displaced domestic investors as the most influential investment block.

    Besides the dominance of foreign portfolio investors, the report underlined increasing retention of foreign capital in the stock market. While total foreign inflow for the four-month period stood at N191.78 billion, total outflow was N148.76 billion.

    Breakdown analysis of the flows showed that inflows stood at N40.96 billion, N39.34 billion, N43.13 billion and N68.35 billion in January, February, March and April respectively as against outflow of N20.50 billion, N36.63 billion, N37.01 billion and N54.62 billion within the same period.

    After they orchestrated massive decline at the NSE and created the ripples that sent the market to its longest recession ever in 2008, foreign investors had gradually flowed in more funds than they were taking out over the past four years.

    Foreign investors had taken out N360 billion in 2007 as against inflow of N256 billion, initializing the first worries that set the stage for the massive scramble for exit in 2008. In 2008, FPI outflow stood at a staggering N634 billion as against inflow of N154 billion for the year.

    However, as the domestic investors caught the panics and were pushing the market further downward, foreign investors increased their inflow gradually from N229 billion in 2009 to N382 billion in 2010 and grew this to N513 billion in 2011 before trimming down to N451 billion in 2012. Over these years, FPI outflows were lower than inflows at N196 billion, N195 billion, N335 billion and N357 billion in 2009, 2010, 2011 and 2012 respectively.

    NSE’s data indicated that total foreign portfolio transactions-inflows and outflows, increased from N615.6 billion in 2007 to N787.4 billion in 2008. These trimmed down to N424.6 billion in 2009 before rising consecutively to N577.3 billion and N847.9 billion in 2010 and 2011 respectively. Foreign portfolio trades stood at N808.4 billion in 2012.

  • ‘Nigeria’s environment tough for foreign investors’

    Nigeria’s business environment is a difficult terrain for foreign investors, despite its long-term potential as an investment destination, a new report published by Oxford Business Group (OBG) has said.

    OBG Editor-in-Chief Andrew Jeffreys said Nigeria is a complicated country for a foreign investor to enter because of its problematic infrastructure, competitive labour force, and sizable supply of feedstock, among other factors.

    Regional Editor Robert Tashima said although Nigeria had a way to go before it supplanted South Africa as the continent’s biggest economy, the slow and steady reform of the country’s infrastructural bottlenecks, such as electricity generation, had helped improve the medium- and long-term outlook for its industrial and service sectors.

    “Oil and gas may still dominate, but fields such as manufacturing, telecommunications and finance are playing an increasingly prominent role,” he said.

    He said the risk in Nigeria is no small thing and that short-term returns were hard to come by, but the country’s structural fundamentals, such as a large consumer market and labour pool, a sizable supply of industrial input, accessible liquidity and a wealth of natural resources mean the potential for long-term growth is immense.

    He said the government’s plans for economic growth and development over the short- and medium-term are ambitious, with targets to surpass South Africa as the continent’s largest economy in the coming years and a bid to become one of the world’s 20 largest economies by 2020. However, there are still some obstacles which must be overcome to make that happen, including poor infrastructure, insufficient job creation, and a dependency on oil and gas revenues.

    The report also explores some developments taking place in the country’s utilities sector, where the planned privatisation of several state-owned power companies has been subject to a number of setbacks. It looks at the drag poor electricity supply has on broader output, along with the benefits which private sector participation, if successful, could bring in the coming years, including improved distribution infrastructure.

    The report also provides detailed coverage of moves to expand Nigeria’s tertiary sector, including telecommunications — where a new policy is hoped to spur spending on broadband infrastructure —as well as financial services, which have continued to make sustained progress following the domestic banking crisis in 2009.