The Nation Newspaper

Tag: NSE

  • Foreign investors stake N495b on Nigerian equities

    Foreign investors stake N495b on Nigerian equities

    Foreign investors staked more than N495 billion on Nigerian equities in the first four months of this year, according to the latest figure released by the Nigerian Stock Exchange (NSE).

    The four-month foreign portfolio investment (FPI) indicated foreign investors accounted for more than two-thirds of transaction value at the Nigerian stock market during the period, with foreign investments picking up gradually in the last month.

    The report used two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

    The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers.

    According to the report, foreign investors were responsible for about 68 per cent of total transactions while Nigerian investors accounted for 32 per cent. Both sell and buy transactions from foreign investors amounted to N495.3 billion as against N236.7 billion traded by domestic investors, indicating aggregate turnover of N731.9 billion.

    Analysis of foreign portfolio transactions however indicated that there were more sale transactions than buy transactions. Foreign investors sold about N302.82 billion worth of shares as against N192.47 billion bought during the period.

    In April, foreign investors traded N138.79 billion worth of shares including sales transactions of N73.73 billion and buy transactions of N65.06 billion. Total domestic transactions stood at N45.64 billion. Total transactions during the month stood at N184.43 billion.

    The foreign sale-buy trend in April followed the same trend in recent months, although the momentum of buy transactions appeared to be picking up. In the first quarter, nearly two-thirds of foreign portfolio transactions were on the sell side.

    According to the NSE, total foreign outflows stood at N229.03 billion in the first quarter, representing some 64.2 per cent of total foreign transactions during the period. Total foreign inflows stood at N127.41 billion. Altogether, foreign investors’ deals accounted for N356.50 billion during the three-month period, more than 65.11 per cent of total transactions of N547.51 billion. This indicated that Nigerian investors accounted for N191.01 billion, 34.89 per cent of total transactions, during the period.

    Month-on-month analysis showed that there was increase in the momentum of foreign transactions in March 2014, with increases in both sell and buy orders. However, the downtrend continued to dominate transactions. Total foreign outflow in March 2014 stood at N75.42 billion as against inflow of N55.13 billion, totaling N130.55 billion. Foreign investors accounted for 78.25 per cent of total transactions-foreign and domestic, of N166.84 billion in March 2014.

    The flow of investments in March 2014 contrasted sharply with the situation in March 2013 when there were more inflows than outflows. Total foreign inflows totaled 53 per cent of total foreign transactions in March 2013. Total foreign transactions stood at N80.14 billion in March 2013, consisting of inflow of N43.13 billion and outflow of N37.01 billion.

    Month-on-month, the outflows in February are about 107 per cent higher compared to January 2014 and about 183 per cent compared to February 2013. While total transactions at the NSE increased from N181.97 billion in January 2014 to N198.70 billion in February 2014, foreign outflows accounted for the increased tempo of activities and the higher proportion of foreign participation to local participation.

    Foreign portfolio outflows stood at N103.53 billion in February 2014 as against foreign inflows of N32.75 billion. These indicated that foreign investors accounted for 68.59 per cent of total transactions during the period.  This contrasted sharply with the situation in similar earnings season of February 2013 when foreign investors had more inflows at N39.34 billion as against outflows of N36.63 billion.

    Total foreign outflow had stood at N50.14 billion in January 2014 as against inflow of N39.53 billion during the period, bringing total foreign transactions to N89.67 billion. In comparable period of January 2013, foreign inflow was higher at N40.96 billion against outflow of N20.50 billion.

    Recent reports have continued to highlight increased foreign participation, though negative. Foreign investors accounted for 49.28 per cent of total transaction value of N181.97 billion in January 2014 as against 36.89 per cent of total transactions of N166.60 billion in January 2013 and 48.91 per cent of total transactions of N142.24 billion in December 2013.

    Portfolio flow analysis in recent period had shown a consistent trading pattern in foreign transactions. While foreign investors flowed in more funds than they took out in the first half of 2013, they have since been taking more money out than they invested since the beginning of the second half of 2013.

    Month-on-month analysis showed that total foreign transactions closed December 2013 at N69.57 billion, consisting of inflow of N32.40 billion and outflow of N37.17 billion. Total foreign transactions rose to N88.89 billion in November, including inflow of N42.68 billion and outflow of N46.21 billion. These had closed October at N82.33 billion including inflow of N39.45 billion and outflow of N42.88 billion.

    In September, total foreign inflow was N26.14 billion as against outflow of N27.88 billion, bringing total foreign transactions to N54.02 billion. Total transactions at the stock market during the month stood at N108.19 billion, out of which domestic investors contributed N54.17 billion or 50.07 per cent.

    In August, foreign inflow had 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 seventh month report for 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 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.

    Foreign investors had 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.

    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 portfolio investors concluded deals worth about N2 trillion on publicly quoted Nigerian equities between 2012 and 2013. Value of foreign portfolio transactions on the NSE increased by 29 per cent in 2013 as domestic investors showed keener interests in listed equities.

    Value of foreign portfolio transactions increased from N808.4 billion in 2012 to N1.04 trillion in 2013. In both years, Nigeria retained net inflow from foreign investors. However, net inflow dropped considerably from N94.4 billion in 2012 to N20.48 billion in 2013, reflecting the speculative and edgy nature of foreign portfolios during the year.

    Foreign investors had accounted for about 61.4 per cent of total turnover on the NSE in 2012 while domestic investors accounted for 38.6 per cent. However, domestic investors stepped up their participation with 49.2 per cent in 2013 while foreign investors slowed down to 50.8 per cent. Foreign portfolios were the main drivers of transactions on the NSE between 2011 and 2012, with foreign investors accounting for average of two-thirds of equity transactions between 2011 and 2012.

    Total foreign inflow increased from N451.40 billion in 2012 to N531.26 billion in 2013 just as foreign outflow correspondingly increased from N357 billion in 2012 to N510.78 billion in 2013.

    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 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.

  • Stock Exchange begins enforcement of online disclosures July 5

    The Nigerian Stock Exchange (NSE) will on July 5 start effective enforcement of new rules and regulations that impose additional sanctions on quoted companies for any inaccurate, misleading, false or deceptive information made available to the investing public through the NSE’s portal.

    In a notification obtained at the weekend by The Nation, Head, Legal and Regulation Department, NSE, Tinuade Awe, stated that the Exchange would begin effective enforcement of the provisions of the rules on online disclosures, otherwise known as Rules Governing the Use of Issuers’ Portal, on July 5 this year.

    According to her, while the Securities and Exchange Commission (SEC) had approved the new rules and the rules became effective in January 2014, the NSE has decided to begin enforcement of the new rules next month.

    She however noted that the enforcement of two provisions of the rules will be delayed till January 1, 2015. Under the two provisions in section 9, subsection A and B of the rules, companies which violate main rules governing the information-disclosure portal of the NSE would be liable to a fine of 50 per cent of their annual listing fees.

    The new rules require companies to indemnify the NSE for all damages or loss it may suffer as a result of any inaccurate, misleading, false or deceptive statement contained in the information they submit to it through the issuers’ portal.

    According to the rules, it’s compulsory for all quoted companies to use the issuers’ portal for submission of information to the Exchange in compliance with the listings rules, unless such information falls within an excluded category as the Exchange may in its sole discretion prescribe from time to time.

    The new rules designate the issuers’ portal as the single gateway for filing all periodic and structured and continuous disclosures. The rules described periodic and structured disclosures to include audited and unaudited financial statements, earnings forecast and corporate actions.

    Continuous disclosures were described as notifications of material information including notice of annual general meeting, notice of board meeting, notice of change of auditors, notice of change of company secretary, notice of change of name and registered address, notice of change of registrars, notice of completion board meeting, notice of court ordered meeting, notice of directors dealings, notice of extra-ordinary general meeting and notice of resignation and appointment of directors.

    panies to ensure that such information remains on their corporate websites for a period of three years from the date it is posted thereon.

    Any company that fails to comply with rule 8 would be liable to a fine of 50 per cent of its annual listing fee.

    Also, any company that fails to submit its periodic and structured information as well as continuous disclosures through the issuers’ portal would be liable to pay a fine of 50 per cent of its annual listing fee.

    The rules require every company to appoint and duly notify the NSE of a designated user, who will be the sole authorised user for posting of information to the issuers’ portal. Every company or issuer is required to exercise all reasonable care to ensure that any information it submits through the issuers’ portal is accurate, not misleading, false or deceptive and does not omit any material facts likely to affect the import of such information.

    The rules also specify the formats for information disclosures and require all companies or issuing entities to comply with such formats.

    In the event of any misleading, false or deceptive disclosure or omission of any material fact as well as dereliction in terms of rules governing designated user and failure to comply with stipulated format, the company or issuer shall be liable to pay 50 per cent of its annual listing fee as a fine.

  • NSE insists on minority rule at special meeting

    NSE insists on minority rule at special meeting

    The Nigerian Stock Exchange (NSE) appears resolute in pushing through a new rule that will bar major shareholders, directors and their related persons and institutions from voting at specially-convened meeting for significant public interest transaction that requires approval of shareholders.

    Executive Director, Business Development, Nigerian Stock Exchange (NSE), Mr. Haruna Jalo-Waziri, who gave this indication, highlighted the draft rules on related parties transactions and conduct of annual general meetings as some of the interesting rules being codified by the Exchange as the accepted mode of engagement at the market.

    New draft rules on “meeting convened to obtain securities holders approval” being finalised by the NSE exclude all related and interested parties, entities, associates and proxies from exercising their voting rights, even where they hold fully-paid shares.

    The new draft rules represent major paradigm shift from the current practice where such excluded persons and entities are allowed to exercise their voting rights and runs contrary to the general principle of one share or unit, one vote.

    “Meeting convened to obtain securities holders approval” in capital market parlance generally includes extra-ordinary general meeting (EGM). Many companies refer to EGM as court-ordered meeting, where such meeting requires the prior approval of a court such as meeting for consideration of scheme of merger and acquisition, which requires approval of a Federal High Court.

    Investors’ meetings are broadly classified into two categories- ordinary general meeting and extra-ordinary general meeting. Ordinary general meetings, such as annual general meeting, are held to consider ordinary businesses that entail review of operational and status reports and exchange of views by investors and directors without no change to the ownership structure or basic outlines of the company.

    An EGM is held to enable investors consider and approve a transaction, which usually may lead to changes in ownership or holding structure of the company as well as its basic outlines and existence. Such EGM includes meetings for new or supplementary equity or debt issuance, mergers, acquisitions, shares restructurings and delisting.

    According to the new rules, where a transaction requires the approval of investors, such approval shall be obtained either prior to the company entering into the transaction or, if completion of the transaction is expressed to be conditional on obtaining such approval, prior to the completion of the transaction.

    At the meeting, none of each related party, entity or its associate or proxy and each interested person or entity or and its associates or proxy “shall exercise any voting rights in respect of the transaction nor accept appointments as proxies” even though they are holders of fully-paid shares or unit of investment.

    Where such persons or entities are representing other unrelated or uninterested persons and entities which are qualified to vote at the meeting, their representations will only be valid if they have specific instructions as to voting, according to the new rules.

    “The notice convening the meeting shall state that related parties or interested persons shall abstain from exercising any voting rights at the meeting,” the rules stated.

    Meanwhile, all other rules relating to regulatory approval, notification, publication, documentation, venue, time, period, conduct, rights and privileges and procedures amongst others in respect of general meetings will also apply to EGMs.

    The exclusion of “each related party, entity or its associate or proxy and each interested person or entity or and its associates or proxy” from voting for their holdings appears to imply that such significant corporate decisions would be determined by the minority or non-management investors.

    In other words, only shareholders of public float shares will be allowed to vote and determine such significant corporate decisions.

    The revised listing rules of the NSE stipulates that the public shall hold a minimum of 20 per cent of each class of equity securities of a company quoted on the main board, 15 per cent of each class of equity securities of a company quoted on the Alternative Securities Market (ASeM) and 10 per cent of each class of equity securities of a dual-listed company. This rule is known in capital market parlance as public float.

    Public float is technically a synonym of public shareholder and it generally refers to the 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 five per cent and above in Nigeria.

    Thus, public shareholders and public float do not include shareholders or shares held directly or indirectly by any executive, director, controlling shareholder or other concentrated, affiliated or family holdings.

    Unless where specifically outlined, “close family members” in capital market regulatory parlance globally mean spouse, parents, grandparents, biological and adopted children, step-child, brothers, sisters, spouses of biological and adopted children, step-child, brothers and sisters; grandchildren; and any such person who is financially dependent on such directors or major shareholders, who are excluded for the delineation of public float.

    If such majority-shareholder barring rule is adopted, it means that foreign and Nigerian majority shareholders such as Alhaji Aliko Dangote, who owns majority equity stakes in Dangote Cement and Dangote Sugar Refinery; and Nestle SA, which owns controlling equity stake in Nestle Nigeria Plc will not be able to vote on major corporate decisions affecting their companies.

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

  • Engineers seek adequate gas supply to power plants

    The Nigerian Society of Engineers (NSE) has called on the Federal Government to expand sources of gas supply to power plants to ensure stable electricity nationwide.

    Chairman, Nigerian Society of Engineers (NSE), Egbin branch, Lanre Siddiq, made the call in Lagos on the sideline of the NSE  Egbin Engineering Week. He said the lack of gas supply had affected generation capacities of power plants.

    He said: “Lack of gas supply is causing a great problem for power plants. By now, power generation would have increased substantially but due to insufficient gas supply, generation is dropping.

    “Here in Egbin, for the past two weeks, we have been managing the little we have and that is why there is drop in power generated here.”

    If the government improved  gas supply to power plants, he said there would be tremendous improvement in electricity supply. He urged the government to expand the grid so that it would   evacuate energy generated from the power plants.

    “The government should work on the national grid expansion. For a long time, the grid has been very weak, it needs to be expanded so that it will be able to effectively evacuate energy generated by power plants,” he said.

    Siddiq also said the Council for Regulation of Engineering in Nigeria (COREN) had signed a memorandum of understanding (MoU) with the Economic and Financial Crimes Commission (EFCC) to run quacks out of the industry. He added that NSE Egbin branch was known for its dynamism and well represented in national activities.

    “We promote engineering learning and practice in our environment. The branch has also made great contributions in developing the technical capabilities of Egbin staff through workshops and seminars,” he said.

    On the expansion of the national grid, the Director-General, Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, said the Federal Government was planning a super grid power transmission system to cope with the anticipated increase in power generation.

    Dikki said this when he received a team from China Electric Power Equipment and Technology Company Limited, a subsidiary of the State Grid Corporation of China (SGCC).

    He said the TCN was willing to consider all options to strengthen its wheeling capacity, adding that as the capacity of generation increases, TCN would become bankable due to increase in wheeling and transmission charges, urging SGCC to liaise with TCN to key into the planned massive improvement in the national grid system. He said the sector requires massive investment for rehabilitation and new construction.

    The Vice President of SGCC, Mr. Cheng Wei, who led the delegation, said the team’s visit was a follow up to the visit of Chinese Prime Minister to Nigeria. He said SGCC is China’s largest power company and the world’s utility giant.

     

  • NSE expels stockbroker over fraud

    NSE expels stockbroker over fraud

    The Nigerian Stock Exchange (NSE) has revoked the authorized dealership licence of one of its dealing members-Mr Kayode Awotile, with a warning to all market operators not to engage in any dealings with him.

    In a statement signed by head, broker dealer regulation, Nigerian Stock Exchange (NSE), Olufemi Shobanjo, the NSE said the decision to expel Awotile was taken at the meeting of the Disciplinary Committee of the National Council of the Exchange.

    According to the statement, the meeting decided that that “the registration of Mr. Kayode Awotile, the former Managing Director of Lakesworth Investment & Securities Limited, as an Authorised Clerk be and is hereby revoked pursuant to Rules 45 and 167 of the Rules and Regulations Governing Dealing Members (‘the Rules”) for contravention of the Rules in relation to the unauthorised transfers, sales of shares and failure to carry out the directives of the Committee”.

    The Exchange has been implementing key measures to protect market integrity and ensure fair and open marketplace.

    Speaking at the induction of new dealing members recently, chief executive officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema said being a broker is a call to stand tall in integrity, to be impeccable in character, to be professional in service and to be high in ethics and standards.

    He noted that the NSE has continued to evolve to achieve the highest level of competitiveness by operating fair, orderly and transparent markets that bring together the best of African enterprises, as well as local and global investor communities.

    “It should be noted that we are maintaining and will continue to maintain zero tolerance to sharp practices and deploying requisite technology and expertise to curb and arrest any form of manipulation from all quarters. For all recently qualified stockbrokers, it goes without saying that the investing community will know and judge the Nigerian Capital Market through your example in character and service; the manner in which you engage, interface and service your clients will go a long way in shaping the perception of our market,” Onyema said.

     

  • Major shareholders move to recapitalise quoted companies

    Major shareholders move to recapitalise quoted companies

    •Eye N50b equity funds

    More investors in several quoted companies have agreed to inject new equity funds to bridge financing gaps and reduce dependence on bank loans.

    Against the background of the dormancy in the public issue segment of the primary issue market, several core investors that hold the decisive votes and funds necessary for the success of recapitalisation of quoted companies have opted to inject additional funds, hoping to rally minority shareholders to provide much-needed equity funding to their companies.

    The Nation’s investigation with investment banking sources indicated that no fewer than 10 companies have initiated plans to raise new equity funds, with most opting for rights issue. Rights issue, which pre-allots shares to existing shareholders on the basis of their shareholdings at a cut-off date, underlines a major vote-of-confidence by major shareholders, who are expected to contribute the largest funds. Besides, with one-share-one-vote rule, majority shareholders also, to a large extent, generally determine the new capital issuance of companies.

    Rights issue gives the first right of refusal to existing shareholders and thus preserve existing shareholding structure. It however provides window for new investors to buy into the company through rights trading on the secondary market.

    Unity Bank on Monday opened application list for a N19.2 billion rights issue. Presco is seeking to raise N3.5 billion while May & Baker Nigeria is considering raising some N3 billion from existing shareholders. Julius Berger Nigeria is also considering raising about N8 billion while market sources indicated that many companies including RT Briscoe, Oando and Cement Company of Northern Nigeria (CCNN) among others could be raising funds in the period ahead.

    Market analysts said the growing list of rights issues underscores the preparedness of core investors to refinance their companies as well as the undervaluation of several companies at the stock market. According to analysts, rights issue implies significant financial commitment by the core investors.

    Unity Bank is raising N19.22 billion through a rights issue of 38.447 billion ordinary shares of 50 kobo each to existing shareholders at a price of 50 kobo each. The rights have been pre-allotted to shareholders on the register of the bank as at December 16, last year on the basis of one new share for one share held as at the closure date. The rights issue will close in late June.

    Presco Plc plans to raise about N3.5 billion from existing shareholders with the board of directors of the oil-palm processing company expected to table a proposal for the new equity issue before the shareholders at the forthcoming annual general meeting.

    The Board of Presco would be rooting for a rights issue of 100 million ordinary shares of 50 kobo each on the basis of one new share for every 10 shares held as at the qualification date. The board has indicated that the rights would be offered at N35 per share.

    If approved at the general meeting, Sa Siat nv, which holds 60 per cent majority equity stake in Presco, will provide nearly two-thirds of the rights funds. Presco has 10,000 shareholders with the largest group of shareholders holding small units within the range of 1000 to 10,000 shares.

    In the case of May & Baker Nigeria, Lt. Gen. Theophilus Danjuma (rtd), the major core investor in the healthcare company, will provide some one-quarter of the required equity funds if all shareholders pick up their rights. There are indications that Danjuma, who had earlier extended N2 billion bail-out to the company, might consider providing additional equity funds beyond his pre-allotted shares to bolster the success of the rights issue. Danjuma, a multi-billionaire, at the last count, held the largest equity stake of 24.38 per cent in May & Baker Nigeria through his company, T.Y. Holdings Limited.

    Shareholders of Julius Berger Nigeria Plc are expected to vote on a new capital issue that could see injection of about N8 billion into the leading construction company. While the details of the new issue are still sketchy, directors of the company have indicated they could be raising funds through any form of debt and or equity instrument by way of public offering, private placement and rights issue among others.

    At the forthcoming general meeting of Julius Berger Nigeria next month, shareholders are expected to increase the authorised share capital of the company from N622.50 million, comprising 1.245 billion ordinary shares of 50 kobo, to N800 million, comprising 1.6 billion ordinary shares of 50 kobo. This will create headroom for new issues.

    The board of Julius Berger Nigeria would also be rooting for shareholders’ mandate to issue up to 150 million ordinary shares of 50 kobo each in the authorised share capital of the company to identified investor(s) by way of special placement, at a price  per share to be determined on the basis of the volume weighted average closing price derived from  the daily official list of the Nigerian Stock Exchange (NSE) over the 90-day period immediately preceding the date on which the company obtains the approval of  the Securities and Exchange Commission (SEC).

    Market analysts said they expected more companies to file for rights issue given the high gearing ratios of several quoted companies, which interest burden could stifle returns to shareholders in the period ahead.

    Managing Director, GTI Securities, Mr. Tunde Oyekunle, said companies were making recourse to rights issue because of the relative lull in the public issue market.

    According to him, the recourse to rights issue was a sign of confidence of shareholders in the prospects of their company, especially the core investor, which would provide the larger chunk of the required capital.

    He pointed out that successful rights issue would help to set benchmark for future public offers and galvanise investors to participate in such offerings.

     

  • Safetrust Mortgage Bank to list on NSE

    Safetrust Mortgage Bank Limited plans to list its shares on the Nigerian Stock Exchange (NSE) within the next three years as the mortgage bank moves to consolidate its operations and attain a nationwide coverage.

    Managing director, Safetrust Mortgage Bank Limited, Mr. Yinka Adeola, said the mortgage bank has launched a three-year growth strategy that would lead to nationwide coverage and listing of its shares on the NSE.

    According to him, with the mortgage bank now above the minimum capital requirement for its state operating licence, the next focus is to grow its capital to obtain national operating licence and subsequently list its shares on the stock market.

    “Well the three-year plan is that today we are about N2.8 billion and we want to continue to grow the mortgage business and with liquidity management company coming in place by the middle of the year, we believe there is much more to do in the area of mortgage and we will be doing larger business and the return will be much. We will be doing that over the course of 36 months and the shareholders’ funds will be above N5 billion organically,” Adeola said in response to questions by The Nation.

    He said the mortgage bank might also consider mergers and acquisitions noting that the board will be willing to consider acquisition if there is a creditable partner where there is synergy and there is advantage in merging the business.

    He said the mortgage industry has immense potential that would make mortgage stocks attractive to investors pointing out that Safetrust as one of the oldest mortgage bankers in Nigeria with more than 20 years of operations and enormous experience is at vantage position ahead of the competition.

    According to him, the major challenge of the mortgage industry is the high interest rate and cost of mortgage, which will be shortly addressed with the impending commencement of operations of the Mortgage Refinance Company (MRC).

    “I think the mortgage industry is the next big thing to happen in the financial industry because every human being needs a room over his head and we all know that the housing gap in Nigeria today is about 17 million. Imagine denting that even at an average of one million per annum what it will translate into the GDP so, the potential is big.

    The main challenge is the interest rate and cost of mortgage and the frontal attack to that is the liquidity management company that the federal government is putting in place with the support of the World Bank and Nigerian Sovereign Wealth Fund. With that, they will come out with mortgage rate that is likely to be in single unit. Once we can achieve that, we believe that will start unleashing the energy in the mortgage industry,” Adeola said.

    He said Safetrust’s resolve to continue to be a one-stop mortgage banking shop remains unfettered as evident in the substantial strides made by the bank towards human capital development, upgraded service standards and branch networking.

    According to him, the bank is currently working on expanding its branch network with more branches expected in Lagos State while it will also adopt agent banking model to reach out to more customers.

    He added that the mortgage bank has concluded on improvements of its service channels with customers now able to avail themselves of electronic banking services such as Automated Teller Machines (ATMs), telephone banking and internet banking while it is working on providing additional e-channel services to its customers.

  • Unity Bank’s N19.22b rights issue opens

    Unity Bank’s N19.22b rights issue opens

    Unity Bank Plc at the weekend opened application list for a rights issue of 38.447 billion ordinary shares, starting the first part of a two-part new capital issue that is expected to inject more than N39 billion into the bank.

    The opening of application list followed approvals of the Securities and Exchange Commission (SEC), Nigerian Stock Exchange (NSE) and Central Bank of Nigeria.

    Unity Bank plans would be raising N19.22 billion through a rights issue of 38.447 billion ordinary shares of 50 kobo each to existing shareholders at a price of 50 kobo each. The rights have been pre-allotted to shareholders on the register of the bank as at December 16, 2013 on the basis of one new share for one share held as at the closure date. The rights issue will close in late June.

    The bank will also be undertaking a private placement of 40 billion ordinary shares of 50 kobo each at 50 kobo each to bring in additional N20 billion in new equity funds next month.

    The net proceeds of the new capital issues would be used for new branch development, upgrade of information and communication technology, human resource development, working capital and products and channel upgrade among others.

    Chairman, Unity Bank Plc, Alhaji Lamis Dikko urged shareholders of the bank to pick up their rights noting that the bank’s valuation can only get better.

    “It is a penny stock and it can only get better.  The bank focus is being reinvented considering the background of where we came from, it is been very challenging from the post consolidation period but at least now we have overcome these issues. The bank is set for turnaround,” Dikko said.

    Managing director, Unity Bank, Mr. Henry Semenitari said the new issues would foster the current repositioning of the bank aimed at entrenching better service delivery and profitability.

    According to him, the net proceeds would be judiciously utilized to improve the bank’s processes, procedure and people and strengthen its overall framework to achieve impressive growth.

    “Our journey is very precise as an institution. There were two challenges to driving our growth strategy, one was capital and other was the right size and mixed of man power. On the issue of human capital, as you can see, that has been address. We have a new set of management with new executive directors and non-executive directors in place. On the aspect of capital, it has brought us this far, the importance of capital in business, beyond being regulatory as per capital adequacy, cannot be overemphasized; it is needed to drive the business. As you have seen in the prospectus, the utilisation of the proceeds clearly expressed what we are going to do with the funds,” Semenitari said.

    According to him, the bank is optimistic that it will raise all the funds and there could be over-subscription as some shareholders have started making deposits to take their rights.

    “The offer will be used judiciously to drive our business and we are going to be more prudent. It is a new dawn in Unity Bank. You can see this in our first quarter result. With the network in excess of 245 branches, our retail banking is on track. To be the retail banking of choice in five years, we are working along three parameter-small and medium enterprises (SMEs), agriculture and rural economy. Within SMEs, it involves personal banking and our growth strategy in term of deposit by the year 2016 is that 40 per cent of our deposit base will be in the hands of individuals, which is very sustainable deposit in our book coming from a public sector background. We can assure you that this is a reawakening as a bank,” Semenitari said.

  • Capital Hotel gets deadline to restructure capital

    Capital Hotel gets deadline to restructure capital

    The Nigerian Stock Exchange (NSE) has directed the Board of Capital Hotel Plc, the owner of Sheraton Abuja Hotel, to restructure its issued share capital to dilute the existing concentrated shareholdings of the core investors and allow more investments from the public.

    In the latest report on public shareholding status in quoted companies obtained by The Nation, the NSE indicated that Capital Hotel is in violation of the listing requirement, which compels companies quoted on the main board of the NSE to ensure that a minimum of 20 per cent of its issued shares is in the hand of the public.

    The management of the NSE stated that it has notified Capital Hotel of the deficiency in its shareholding structure. Companies listed on the Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities. The free float requirement for companies on the main board is 20 per cent while companies on the second board, otherwise known as Alternative Securities Market (ASEM) are required to have 15 per cent 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 five per cent and above in Nigeria.

    Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated or family holdings.

    The report indicated that Capital Hotel has 2.23 per cent of its issued shares in the hands of the public, implying that the core investors will need to sell down about 17.77 per cent to the public or undertake a dilution through new capital issue.

    According to the report, the management of the NSE has given Capital Hotel a deadline of April 20, 2016 to complete the share restructuring.  The deadline was in deference to application by the management of Capital Hotel for some period to comply with the free float. However, the company is required to provide quarterly disclosure reports to the NSE on the efforts being made to fully comply by the deadline.

    By the expiration of the deadline, Capital Hotel is mandatorily required to have completed partial divestments or dilution of the ‘non-public’ shareholdings to free 20 per cent equity stake for public holding, unless the management of the NSE grants fresh waivers and extensions for the companies. In the extreme instance, a company with deficient public float may opt to delist its shares.

    Incorporated in January 1981 as a limited liability company, Capital Hotel became a public limited liability company in May 1986 and was listed on the NSE in August 2008.

    Its hotel, Sheraton Abuja Hotel started business in January 1990. Capital Hotel is a member of the Ikeja Hotel Plc, which included Tourist Company of Nigerian (TCN) Plc, another quoted subsidiary that has filed for voluntary delisting due to similar free float deficiency. Ikeja Hotel is also quoted on the NSE.

    As earlier reported by The Nation, the report indicated that three other companies- Dangote Cement Plc, Union Bank of Nigeria (UBN) Plc and Wema Bank Plc – are still below the 20 per cent minimum float.

    The report indicated that Wema Bank is slightly under the 20 per cent free float with a free float of 19.64 per cent.  Wema Bank is expected to adjust its shareholding structure to free 20 per cent of its equities for unrelated shareholders by July 31, this year.

    Dangote Cement has up till October, this year while Union Bank of Nigeria has up till June 2017 to comply with the free float. The updated free float record of the NSE indicated that Dancem has a free float of 7.19 per cent, 12.81 percentage points below the minimum requirement of 20 per cent. Union Bank has a free float of 14.94 per cent, 5.06 per cent below the minimum standard.

    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.

  • Oil services firm Caverton set for $197m listing

    Oil services firm Caverton set for $197m listing

    An indigenous oil services company Caverton has received stock exchange approval for a planned N31.8 billion ($197 million) listing on May 20.

    Caverton, which provides marine and aviation services to multinational oil companies, including Shell, Total and Addax, said it will list 3.35 billion ordinary shares on the Nigerian bourse at N9.50 per share.

    The Nigerian Stock Exchange (NSE) Chief executive Officer (CEO) Oscar Onyema told Reuters last month that he expected more oil and gas listings to follow Seplat’s market debut in Lagos and London via a $500 million initial public offering (IPO).

    Nigerian IPOs dried up after a 2008 crash wiped more than 60 per cent off the market’s capitalisation. The index has since recovered, gaining 35 percent in 2012 and 47 percent in 2013, but new listings are still only trickling in.

    Caverton did not announce plans to raise fresh equity capital but said it wants to broaden its ownership base as it expands its shipping and helicopter services and diversify into new markets within West Africa.

    Profits at the oil servicing firm rose to N1.04 billion  in 2012, from N60.37 million a year earlier. Revenue grew to N16.13 billion naira in 2012, against N10.93 billion in 2011, the company said.