The Nation Newspaper

Tag: funds

  • Investment One advises companies on how to raise funds

    Investment One Financial Services Limited has underscored the need for Nigerian companies to seek professional advice on their capital structure and available financing options in order to grow their businesses and avoid financial shocks.

    At a seminar organised by Investment One Financial Services Limited in partnership with the Network Business Club, experts discussed various ways to attract smart money to grow business.  The seminar was directed at different levels of business, ranging from large companies to Small & Medium Enterprises (SMEs) looking to bring their business ideas to reality or scale up their business. The seminar thoroughly examined how to attract smart money and had various speakers who addressed various aspects of the seminar theme.

    Managing director, Capital Management Division, Investment One Financial Services Limited, Mr Ademola Aofolaju said companies must realize the importance of correct capital structure for their particular kind of business.

    According to him, the proportion of debt to equity may be related to growth potential and cash flow and the varying business needs which may include expansion, working capital and asset acquisition.

    He also outlined the detailed requirement for attracting smart money which include the 5Cs of capital, cash flow, character, capacity and collateral, adding that other requirements may include experience, sound operations, financial records, governance structures, compliance and legal structures and market positioning.

    In his remarks, managing director, Investment One VenCap, Dr. Ore Sofekun, noted that for Nigeria to achieve the desired economic growth, there must be a shift from being a consuming nation to a producing nation. Investment One VenCap is the private equity and venture capital subsidiary of the financial services group.

    She pointed out that for a country with Nigeria’s population size, SMEs is one of the growth engines.

    She added that the seminar was held in line with the group’s commitment to providing financial education to both individuals and businesses, helping them to achieve their desired financial goals.

    Chairman, Networks Business Club, Mr Ernest Obi, explained that the event was borne out of the identified needs of their members who have businesses at different stages of either inception or growth and for whom financial advice was required to achieve the desired result.

    According to him, the objective of the event was to provide business owners with a platform to directly engage investors.

     

     

  • Airtel backs group to raise funds for IDPs

    Airtel backs group to raise funds for IDPs

    In its continued efforts at providing succour and relief to internally displaced people across the country, leading telecoms services provider, Airtel Nigeria, has announced the sponsorship of an initiative tagged ‘Climb with Remi,’ aimed at raising funds to care for internally displaced people (IDP) in Nigeria.

    Under the programme, a group of six passionate Nigerian women have decided to climb the highest mountain in Africa, Mount Kilimanjaro, as part of activities to attract global attention and raise funds in support of government’s efforts at improving the living conditions of displaced women and children in IDP camps across the country.

    Backed by Airtel Nigeria, the project is championed by Mrs. Remi Abere, the oldest Nigerian woman to reach the peak of Mt. Kilimanjaro. She is joined by other women including the wife of Ogun State governor, Mrs Funsho Amosu; former member, Federal House of representatives, Hon. Abike Dabiri-Erewa; Mrs. Joke Olanipekun; Mrs. Uzo Nwani and Mrs. Debo Laditan.

    Speaking on the initiative, Managing Director and Chief Executive Officer, Airtel Nigeria, Mr. Segun Ogunsanya, noted that the telco remains committed towards bringing relief and giving hope to internally displaced persons across the country.

    “Through the ‘Climb with Remi’ intervention, Airtel Nigeria has joined these committed, compassionate and selfless women and mothers on the need to sensitise more Nigerians to give andextendlove to underprivileged people including women and children who are victims of unfortunate social menace in our society.

    “By defying height and other unfavourable conditions known with climbing Mount Kilimanjaro, these women have shown that as individuals or collective groups we can overcome challenges when we unite,” Mr. Ogunsanya said.

    At the press launch of the ‘Climb with Remi’ initiative held at GRA, Ikeja, Mrs. Abere, explained that the group is committed to rehabilitating and reintegrating internally displaced women and children back into the society.

  • High cost of funds takes toll on firms

    High cost of funds and lack of access to amenable capital are adversely impacting on earnings potential and returns of several companies, reports have shown.

    Early third quarter earnings reports from quoted companies indicate that most firms were constrained by increasing financing charges, otherwise known as interest expenses, leading to steep declines in profits in most cases.

    Not less than 70 per cent of non-financial quoted companies that have so far submitted earnings reports for the period ended September 30, 2015 recorded declines in profits, with more than 80 per cent of the declines in the bottom line directly related to increase in financing charges.

    A review of the reports showed that while other macroeconomic conditions, especially slowdown in top-lines due to decline in purchasing power and increase in costs of sales due to exchange rate depreciation, contributed to low performances by companies, high cost of funds was the major factor that wiped off positive trading and operating profit performance to undermine pre-tax profit.

    For the nine-month period, Mobil Oil Nigeria Plc reported that financial charges rose by 50 per cent while its pre-tax profit dropped by the same margin. Nigeria’s second most capitalised quoted company, Nigerian Breweries, also reported that financial charges jumped by 53.6 per cent just as pre-tax profit declined by 11.8 per cent. Transnational Corporation of Nigeria (Transcorp) Plc’s financing charges rose by 42.6 per cent while its profit before tax dropped by 26 per cent.Another downstream oil company, Forte Oil, recorded a modest increase of 1.63 per cent growth in pre-tax profit against the background of 16.8 per cent increase in interest expenses.

    Also, Courteville Business Solutions Plc’s financing charges jumped by 207 per cent, which contributed to 18 per cent decline in pre-tax profit. First Aluminium Nigeria Plc witnessed 14 per cent increase in interest expense, which also contributed to 26 per cent decline in pre-tax profit of the struggling company.

    Financing cost, which rose by 200.8 per cent, contributed significantly to N38.58 billion loss recorded by Oando Plc in the first half ended June 30 this year according to report released at the weekend. Oando’s financial charges for the six-month period had risen to N26.65 billion this year as against N13.27 billion recorded in comparable period of last year, compounding the slowdown in sales and foreign exchange challenges. The integrated energy group had recorded profit before tax of N8.57 billion in comparable period of last year.

    Many top management sources said their inability to source new equity capital due to the meltdown at the capital market had forced them to continue relying on high-interest bank loans. Many had suspended or slowed down considerably their long-term corporate growth plans due to paucity of funds.

    Head, financial advisory group, GTI Capital Limited, Mr. Hassan Kehinde, said the inability of companies to raise funds locally through the capital market had forced them to opt for foreign loans, which initially were obtained at relatively cheaper rates but subsequently became serious burden due to devaluation of naira.

    Citing several companies in the fast-moving consumer goods industry and oil and gas sector, Kehinde said the apathy in the primary market of the Nigerian capital market was partly responsible for undue financial leverage noticed in the accounts of many companies.

    He added that besides the risk of high interest expense due to tightened banking operating environment at home and the foreign exchange risk associated with foreign loans, financial mismatch might further undermine the performance of several companies as they had been forced to use short-term banking loans to finance unsuitable relatively longer projects.

    Companies that had recently launched bids to raise new capital have demurred from furthering the issuance process as share prices continued to fall at the Nigerian Stock Exchange (NSE). Flour Mills of Nigeria Plc, which recently submitted application for regulatory approval to raise N30.25 billion through a proposed rights issue, opens today below the proposed offer price at N21. Flour Mills had planned to offer 1.09 billion ordinary shares of 50 kobo each to existing shareholders at N27.50 per share. Another company, May and Baker Nigeria Plc, which had announced plan to float a rights issue, opens at N1.22, a price the promoters of the issue considered to be below the intrinsic value of the company with World Health Organisation (WHO)-certified manufacturing complex.

    A management source in one of the prospective issuers had told The Nation that they were reconsidering their new issue plan and would likely opt for private placement on concerns that the company might not get the right value for its shares through the open offer and investors might shun the issue.

    Companies that had floated new issues in recent period largely fell below their offer targets. All the companies have also been trading below their offer price, putting subscribers to the issues in losses.  Access Bank, which had offered about 7.63 billion ordinary shares of 50 kobo each at N6.90 to existing shareholders, recorded 79.4 per cent success rate.

  • TETFund revokes institutions’ approval over funds

    TETFund revokes institutions’ approval over funds

    Prof. Suleiman Bogoro, the Executive Secretary, Tertiary Education Trust Fund (TETFund), said the agency revoked approvals granted to some institutions over their inability to access their allocations for five years.

    Bogoro made this known when Governor Abubakar Bello of Niger State visited him on Wednesday in Abuja.

    According to Bogoro, TETFund is striving to maintain its institutional image which is hinged on accountability and transparency.

    “Just about nine months ago, the Board of Trustees of TETFund had to vacate some approvals that have been lying for four to five years and were not accessed.

    “For some, even ordinary Approval in Principle (AIP) we never got from them; so we said no; there are some other institutions that need this money.

    “We had to revoke them and re-allocate to other institutions.’’

    NAN quoted the TETFund boss as saying, “that there were operational requirements that tertiary institutions in Niger State had not met, hence their inability to access much funds like other institutions in some states.”

    Earlier, Bello had expressed concern over the disparity in accessing TETFund intervention funds among higher institutions in the country.

    He said that the visit had offered him the opportunity of understanding TETFund modalities, adding that institutions in his state had to approach TETFund in the appropriate way.

    “I now understand how TETFund operates; we will go home and make corrections with regards to the procedure of accessing the funds.

    “I will meet with authorities of tertiary institutions in the state and iron out the issues we have in terms of accessing TETFund interventions.’’

    Bello commended TETFund for it accountability.

     

  • How to invest pension funds

    What is a pension? Put simply, a pension is a vehicle to provide deferred compensation to employees and usually their partners in retirement. Properly managed, a pension must cover its liabilities as these become payable.

    Nevertheless, many pension plans today invest their assets independently of the promises or liabilities created. A recent study showed that US pensions still invest close to 60% of their assets in equities, almost 25% in bonds (down from prior periods), and the rest in cash/other. This can create an asset-liability mismatch, meaning that retiree benefits may not be payable if the stock market takes a tumble and stays down for years or during periods that liabilities/promises fall due.

    There may be lessons to be learned from endowments and sovereign wealth funds (SWFs). Most critically, the “better-managed” among these institutions tend to incorporate both a liability and a funding analysis in their investment program. That is, similar to pensions, endowment and SWF obligations can be outlined in terms of near, medium and long term funding needs: for instance, a sovereign or organization may save and invest for the population’s aging-related costs, such as medical or long term care, or to finance a new university library.

    Similarly, we can think about ourselves as needing to understand our future liabilities or needs, identifying both the “hard” and the “soft” liabilities. Hard liabilities could involve a mortgage or a child’s education costs, while soft liabilities may include travel or expensive hobbies, or uncertain health issues and broader family obligations, such as care for parents.

    To the extent that some of your retirement needs are longer term, this can allow you (and your pension fund) greater investment flexibility. For instance SWFs, endowments and life insurers often provide or “sell” liquidity via investment capital seeking a 4-6% illiquidity premium; this means they lock-up capital for longer periods, rather than having more immediate access.

    Yet regulators and policymakers largely focus on the asset side of institutional balance sheets, rather than liquidity, funding and liability structures. Indeed, this was a contributing factor to regulatory shortcomings before the financial crisis of 2008. Today, we seem to be doing the same again…for example, efforts to regulate non-banks – including pensions – the same as banks, leads to short-termism, and we are implementing non-risk based rules on banks (eg., leverage ratios), which lead banks to provide less market liquidity. Such regulatory policies influence market behavior, making it more difficult for retirement investors to exercise the flexibility inherent in their balance sheet structures. What we need is for the less-liquidity-constrained investors to provide longer-term capital, given their longer-term liabilities, and not encouraging pro-cyclical or short-term investment behavior.

    • Culled from Forbes
  • Bailout funds: CBN pegs repayment time at 20yrs

    Bailout funds: CBN pegs repayment time at 20yrs

    .Ogun opts for 10yrs

        19 states access funds

    The Central Bank of Nigeria (CBN) yesterday said 19 out of the 27 states of the federation have accessed the bailout funds, and are expected to repay the loans in 20 years.

    CBN spokesman, Ibrahim mu’azu, said the decision was approved by the National Economic Council (NEC) and that the beneficiary states which had benefitted from the workers’ salary bailout package are expected to deploy the funds to pay the workers’ salary arrears.

    He said contrary to reports that Ogun State had accessed N20 billion, spokesman confirmed that the actual amount is N18.9 billion.

    On the tenor of the bailout facility, he said that all the states had a 20-year tenor except Ogun which opted for a 10-year tenor.

    Earlier, states like Kwara, Zamfara, Osun, Niger, Bauchi, Gombe, Abia, Adamawa, Ondo and Kebbi had applied for and received various sums from the bailout facility.

    Other states included Ekiti, Imo, Ebonyi, Ogun, Plateau, Nassarawa, Sokoto, Edo and Oyo which were granted in the week.

    CBN Governor Godwin Emefiele earlier told the NEC meeting that 18 states – up from 11 as at last month – had benefited from the Special Intervention Fund aspect of the presidential relief package.

    He said the loan was part of President Muhammadu Buhari’s relief package designed to help states pay backlog of salaries and ease their financial challenges caused by the drop in allocation from the Federation Account.

    Also, the Director-General of the Debt Management Office, DMO, Mr. Abraham Nwankwo, told the NEC that the second phase of the debt restructuring offered to the states was in effect, with 13 new states now being considered.

  • Don’t fight over training funds, VC tells colleagues 

    The Vice Chancellor of the Federal University, Otuoke, (FUO), Professor Mobolaji Aluko, has advised vice chancellors, rectors and provosts of the nation’s institutions not to struggle with their staff over the Tertiary Education Trust Fund (TETFund) training funds.

    Aluko said the human capacity training  funds are meant for lecturers and not for vice chancellors, rectors and provosts.

    Aluko gave the advice, while speaking with newsmen who where on an assessment tour of TETFund projects in the FUO, University of Benin, Auchi Polytechnic, Ambrose Ali University, College of Education, Agbo, Delta State University, Abraka and Federal University of Petroleum Resources, Effurun, Delta State.

    His words: “We are the ones who made the decision for the CEOs of universities, polytechnics and colleges of education not to be part of funds meant to train lecturers in various institutions. I support the exclusion. I go to conference if I want.  Why should I again be fighting with other staff over the TETFund money for training when I can make a decision to go to other countries for training? I do not see that as an issue.”

    He said government higher institutions would have failed, if not for the Tertiary Education Trust Fund (TETFund).

    He said over 90 per cent projects in institutions are through the TETFund intervention funds.

    His words: “When TETFund allocates money to you, it is sure that you will get it. Without TETFund, many universities and other institutions would have failed. It means they may not function again.

    ”Universities have been pleading to the TETFund to allow us de-batch periodically so that one project will not delay another. Give us 85% at the very beginning. The fact that they give us 50% does not mean that we give the contractors the entire 50%. We still give them based on valuation.

    ”Another problem is that they wouldn’t give you money, if you have not retired the initial money. This causes trouble because once the TETFund has allocated money to you, it will always be yours, but that means that there will be a lot of money in the TETFund for various institutions without access.

    “TETFund has three special accounts. They are special projects account, normal intervention account and academic support account.  The TETFund should give us more flexibility so that projects will move on. We are major beneficiaries of the TETFund projects that are going on. We used TETFund money to upgrade many of the buildings in the universities.”

  • Stop tampering with local govts’ funds, NULGE urges governors

    Stop tampering with local govts’ funds, NULGE urges governors

    The National Union of Local Government Employees(NULGE) has urged President Muhammadu Buhari to sanction state governors allegedly tampering with the local government funds to checkmate the drift in the third-tier of government in the country.

    Speaking, the  National Vice President of NULGE, Mr OludareFamoofo, who is also the Southwest Chairman said: “Our Union is constrained to point out that the body language of Mr. President has not reflected in the way the governors are handling the Local Government Joint Accounts.It has always been like this but be a  party to making it to endure forever.

    He lauded the governor of Kaduna State, MallamNasir El Rufai  of his decision  not to tamper with the local government funds.

    Famoofo said: “ Nasir El- Rufai is the only governor that is doing the right thing by not tampering with local government funds.  We want to state categorically that part of the root causes of insurgency in Nigeria is the hijack of local government funds by state governors for a long time, thereby robbing the grassroots of real development.”

  • Ebonyi bans lodging public funds in private accounts  

    The Ebonyi State government has outlawed the transfer of public funds into private accounts, threatening that anyone caught flouting the directive will be summarily dismissed and prosecuted.

    The State Auditor-General for Local Government Areas, Mr. Ndukwe Ukpai, a lawyer, stated this in Abakaliki, the state capital, at a meeting with the acting Head of Personnel Management (HPMs), Treasurers, Internal Auditors, Administrative Officers and Head of Works Department in the various local government areas in the state.

    Ukpai who described transfer of public funds into private accounts as criminal, said there must be a paradigm shift in the local government system.

    He said the present government cannot tolerate corruption, ghost workers, payroll padding and absconding of staff, which he said was rife in the past administration.

    He added, “Internal auditors of local government areas and development centres are to prepare their monthly audit programmes and submit a copy to the Auditor-General.

    “All internally generated revenue collections, where not on contract, must be paid into the relevant bank account on the same day of collection and the relevant treasury receipt obtained from the accounts clerk the following day. Revenue collector’s cashbook shall be audited on weekly basis by the Internal Auditor.”

    He called on them to be acquainted with the provisions of the Financial Memoranda and relevant Laws regulating financial operations in local government system including Law No. 004 of 2015 especially section 5(d) and (e).

  • N3.25tr pension funds invested in govt securities, says PenOp

    N3.25tr pension funds invested in govt securities, says PenOp

    About N3.25 trillion out of the almost N5trillion of the Pension Funds so far collected have been invested in Federal Government securities, the managers of the fund, have said.

    The Chairman, Pension Fund Operators Association of Nigeria (PenOp), Alhaji Musbahu Yola, said this yesterday when he addressed journalists at the end of the consultative forum between the National Pension Commission (PenCom) and Pension Fund Administrators (PFAs) in Abuja.

    He said the invested amount is equivalent of 65 per cent of the almost N5 trillion pension assets currently warehoused by pension operators, adding that another 12 per cent has been invested in equities, while 15 per cent is invested in the money market.

    Yola maintained that not withstanding the recent removal of Nigeria from the JP Morgan Index, the country’s Pension Fund Operators will continue to invest in FGN Bonds and Treasury Bills, pointing out that FGN Bonds are not only profitable, they are safe to invest in.

    He aid the removal of Nigeria from JP Morgan Index  would favour PFAs because exiting foreign investors will have to sell their assets at lower prices and it doesn’t mean that the FGN Bonds have become junk.”

    He said PenOp members “will continue to invest in FGN Bonds and Treasury Bills,” wondering  where else would we put the money, Treasury Bills and Bonds are safer assets” he said.

    Yola also revealed that it has been agreed between the PenCom and PenOp members, that 20 million Nigerians will be captured into the pension net by 2024 from the current 6.6 million pension contributors, saying “this is the best we can do under the circumstances and it points to the fact that majority of Nigerians are employed outside the formal sector.

    “State governments have also not complied. The point really is that  most Nigerian businesses are informal or are SMEs that haven’t really kicked in for one reason or the other if our economy develops and becomes more Industrialised with more formal corporations, a lot of people will be captured in the pension net but many Nigerian just do small jobs that are not incorporated.

    You can’t get them in so easily, we know we have a lot more to do, but we shouldn’t be discouraged by the fact that it is 6.7 million out of 170 million. Our objective is to go 20 million by 2024, that is where the informal sectors being captured in the guidelines comes in” he said.

    Regarding unremitted employees’ pension after deductions have been made, members of PenOp urged employees to blow the whistle on the employers. They said “employees are responsible for their pension. If employers are not remitting, employees should go to their PFAs and report, you must be in charge of your pension. The PFAs do not have the power to enforce complaints. PENCom has the power of enforcement and they have engaged recovery agents employees must also rise up the law is backing them they have to find the means of making their employers make those remittances on their behalf either as a union, they must come together and pressurize their employers particularly where they have deducted from the salaries and have not remitted.”

    Yola and his team PenOp associates wondered that “if people are afraid of speaking up for their right who will do it for them? Now anybody who wants to do a job with the federal government must produce their certificate of compliance and some private organizations have included it in their manuals too so that they don’t go foul of the law especially those that provide them with contract staff. To prevent victimization PenCom has been mandated not to reveal the identity of whistle blowers.”