The Nation Newspaper

Tag: Stock Exchange

  • EFCC, Stock Exchange strengthen pact to protect investors

    EFCC, Stock Exchange strengthen pact to protect investors

    Authorities at the Nigerian Stock Exchange (NSE) and Economic and Financial Crimes Commission (EFCC) have renewed their commitments to a Memorandum of Understanding (MoU) that seeks to protect investors from market abuses and forestall the use of the Nigerian stock market as conduit for illicit wealth.

    At a high-level meeting at the Exchange in Lagos, Acting Chairman, Economic and Financial Crimes Commission (EFCC), Mr. Ibrahim Magu and Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema led other top executives and stakeholders at the stock market in discussions on increasing collaboration between the anti-corruption agency and the stock market in the fight against corruption.

    Reliable sources at the meeting said both parties reaffirmed commitments to the existing MoU and underscored the need to collaborate in the area of information sharing, investigation and intelligence.

    Both parties said the mutual and cordial relationship between the agency and the stock market should give impetus to anti-corruption campaign and investors’ protection.

    A source in the know said the meeting may lead to further involvement of the EFCC in investigation and prosecution of market abuses.

    Already, EFCC is currently investigating not less than 16 cases of investors’ impersonation under the terms of the MoU.

    A report by the Exchange showed that the some 20 persons are being investigated by the EFCC for alleged impersonation and fraudulent attempt to convert investors’ shares into their names.

    The report indicated that many of the impersonators were operating as syndicates with links across the chain of the capital market transaction. Some of the impersonators had successfully converted and sold other people’s shares but were apprehended when the original owners of the shares reported the illegal transactions.

    Although the details of the investigations are still sketchy because of the confidentiality of the investigations, a source in the know of the investigations confirmed that there were syndicates that took advantage of the dormancy of some investors’ account to surreptitiously prey on such accounts. The source said some of the impersonators specialised in fraudulent conversion of shareholding estates.

    Capital market regulators have responded to recent cases of capital market frauds by tightening existing disclosure rules and sanctions as well as increased collaboration with the law enforcement agencies.

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) and the EFCC recently signed on to an alliance to tackle infractions at the capital market and protect investors.

    While the EFCC has severally participated in capital market investigations in the past, SEC and EFCC in January 2017 signed a Memorandum of Understanding (MoU) that formally establish the alliance between the two Commissions.

    The MoU is expected to promote the efficient investigation and conclusion of all cases reported by either of the institutions to each other and to promote the integrity, efficiency and soundness of the Nigerian capital market and the economy in general.

    It also seeks to promote collaboration in the areas of training and secondment of middle cadre officers of the SEC to the EFCC and those of the EFCC to the SEC; or in the alternative, the establishment of a liaison desk in both Institutions as well as promote collaboration in other areas beneficial to both Institutions.

    According to the MoU, both Commissions shall provide each other with the utmost mutual assistance in any matter falling within their competences, including in particular the following areas: secondment of middle cadre officers, training to enhance the investigative skills and capacity of personnel of the institutions and consequently increase the general output and performance of the institutions and facilitate better understanding of each others’ functions through capacity building programmes and human capital development in the areas of investigation of fraud in the capital market.

     

     

     

    Both institutions will also collaborate in the areas of exchange of information to assist the performance of the institutions’ respective functions, reporting, investigation and prosecution of fraudulent and manipulative practices in the Nigerian capital market and any other activity as agreed between the institutions from time to time.

    However, the MoU serves as a basis of cooperation between the institutions and does not create any binding legal obligation, nor does it modify or supersede any laws, regulations or regulatory requirements in force or applying to the institutions. Furthermore, the MoU does not create any rights enforceable by third institutions nor does it affect any arrangement under other MoUs.

     

  • Tantalizers hopeful of bright business performance

    Tantalizers hopeful of bright business performance

    Tantalizers Plc., Nigeria’s top fast food company is hopeful of the efficiency of its on-going strategic initiatives aimed at reversing the recent declining profitability in the business.

    The initiatives which commenced in the last two years are designed to totally restructure the business, stem the declining performance and boost shareholders’ funds.

    The company is the only quoted QSR Company on the Nigeria Stock Exchange.

    Due to positive results from some of the initiatives, the company’s total systems revenue (corporate and franchise) has reportedly grown in the last two years by a minimum of 6% per annum and is projected to grow further by an additional 10% to N4b in 2017.

    To address the capital structure imbalance which had threatened its business fortunes, the company two years ago it was learnt engaged notable consulting groups to assist in bringing in equity investors.

    Though the process has been largely stalled with the economic recession in the country, there has been a renewed interest from both local and foreign potential investors which is expected to crystallize before the end of 2017.

    “The company is constantly looking at its cost structure particularly with the high cost of doing business in Nigeria. To this end, we have reduced outlet space where necessary in our renovated stores to make us more attractive, compact and efficient. We will continue to explore more avenues for cost reduction, while addressing other areas that we are sure will improve our competitiveness.”

    “In the meantime, to manage the existing debt portfolio, the company has been in discussion with the local banks and IFC for debt restructuring. The discussions have been positive as the debts are already being re-structured. The overall effect of this will be seen in the results of the second half of the year,” a recent media statement from the company stated.

    While predicting a strong outlook for the second half of the year 2017, the company in a recent presentation on the floor of the Nigerian Stock Exchange said its franchise model which was adopted three years ago is already yielding positive results.

    “In the second half of 2017, we will open 5 additional stores in virgin territories thereby increasing our total foot print to 65 outlets. The planned opening of these outlets is an attestation to the strong equity of the Tantalizers brand and the consumers’ yearning for its location in their community. This will have significant impact on our market share and further consolidate our position as a market leader in the industry”.

    The company further noted that “based on these ongoing initiatives and the support from all our stakeholders, we expect to commence the return to profitability position by the end of 2017 while we project dividend payment to commence as profitability improves within the next 24 months”.

    “As we continue to grow total systems revenue, we will aggressively pursue over the next five years business expansion through new outlets, franchising and diversification. With this planned growth, we will return the company to a healthy profitable position and improve shareholders’ fund to over N3billion in the next three years,” it further stated.

     

  • Stock Exchange slams N582.4m fine, expulsion on fraudulent dealer

    The Nigerian Stock Exchange (NSE) has revoked the operating licence of a stockbroking firm-Bytofel Securities and Investment Limited, for allegedly engaging in fraudulent activities. In addition, the firm was fine N582.37 million.

    A circular obtained  by The Nation stated that Bytofel Securities was expelled for engaging in “unauthorised sales of clients’ shares and misappropriation of of clients’ funds”.

    With the expulsion, the stockbroking firm will not be able to trade in the Nigerian stock market and other international markets that Nigeria has Memorandum of Understanding (MoU) with.

    Also, directors, executives, top management and other employees of Bytofel Securities, will not be able to secure any employment in the capital market without prior clearance and written consent of the Exchange.

    “Dealing members are advised not to engage in any activity with the above mentioned firm. Also, all authorised clerks and employees of dealing member firms are strongly advised against allowing themselves to be used in carrying out activities that are capable of affecting the integrity of the market,” NSE stated.

    The Exchange stressed the need for dealing firms to always comply with extant rules and regulations.

    Under Rule 6.12 of the Rulebook of the Exchange, 2015, members of the Exchange are disallowed from employing any of directors, authorised clerks or other persons including principal officers such as the chief executive officer, chief finance officer, chief compliance officer and chief risk officer, who have been indicted by the Exchange or the Commission without prior regulatory approval.

    Also, the rule disallows other stockbroking firms from employing any person who was an officer or employee of a stockbroking firm or dealing member expelled from the Exchange; any person expelled, as an authorised clerk or its equivalent, from any other exchange; any person refused admission as a member of the Chartered Institute of Stockbrokers or any person expelled from its membership; any person expelled as a member of any professional association or institute and any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty.

    The Rulebook of the Exchange 2015 provides that: where the Exchange revokes a dealing member’s licence, the Exchange shall immediately commence the process of expelling such dealing member.

    Besides, the rules empower the NSE to suspend any authorised clerk or revoke the registration of any authorised clerk who has breached any rules or regulations of the Exchange or is found to be complicit in any breach of such rules or regulations.

    Also, suspension of any stockbroking firm by SEC will lead to immediate suspension by the NSE while revocation of any broker’s registration will lead to expulsion of the firm by the NSE.

    “Without  prejudice  to  all  the  remedies  open  to  the  dealing  member,  where  a  dealing member is suspended by the Commission, as soon as the Exchange is notified, it shall immediately  commence  the   process   of  suspension or  expulsion of   the   dealing member.

    “Where a Dealing Member’s registration is revoked by the Commission, as soon as the Exchange  is  notified,  it  shall  immediately  commence  the  process  of  expulsion  of  the dealing member,” the rules stated.

  • Stock Exchange suspends trading on 17 companies

    Stock Exchange suspends trading on 17 companies

    the Nigerian Stock Exchange (NSE) has suspended trading on the shares of 17 companies following the failure of the companies to adhere to best corporate governance and extant post-listing requirements.

    The suspended companies included African Alliance Insurance, Equity Assurance,  Fortis Microfinance Bank, Guinea Insurance, Premier Paints, Resort Savings & Loans, Sovereign Trust Insurance, African Paints (Nigeria), Aso Savings & Loans, Ekocorp, Evans Medical, Goldlink Insurance, Great Nigeria Insurance, Omatek Ventures, Union Dicon Salt, Union Homes Savings & Loans and Universal Insurance Company.

    A circular obtained by The Nation indicated that the companies were suspended after they failed to file their accounts and operational reports as required by the listing rules at the Exchange. The suspension will remain in place until the companies file the relevant accounts and reports.

    With the suspension, investors will not be able to trade on the shares of the companies, thus denying them opportunities to raise funds through such investments in case of financial needs.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than 90 calendar days, or three months, after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 calendar days after the end of the relevant period.

    Most quoted companies including all banks, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year.  Not less than 83 per cent of quoted companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31. While March 31 is usually the deadline for submission of annual report for companies with Gregorian calendar business year, the deadline for the quarterly report is a month after the quarter.

    NSE tags and applies fines on companies that fail to meet earnings reports’ deadline. The Exchange had on January 1, 2017 launched its new sanction regime for delay in submission of companies’ results. Under the new sanction regime, companies may pay fines that range from N100, 000 to more than N100 million as penalties for delay in the submission of their corporate earnings reports.

    Companies that also delayed their financial statements and accounts face threats of suspension and delisting in addition to the monetary fines.

  • Stock Exchange suspends trading on 17 companies

    Stock Exchange suspends trading on 17 companies

    The Nigerian Stock Exchange (NSE) has suspended trading on the shares of 17 companies following the failure of the companies to adhere to best corporate governance and extant post-listing requirements.

    The suspended companies included African Alliance Insurance, Equity Assurance,  Fortis Microfinance Bank, Guinea Insurance, Premier Paints, Resort Savings & Loans, Sovereign Trust Insurance, African Paints (Nigeria), Aso Savings & Loans, Ekocorp, Evans Medical, Goldlink Insurance, Great Nigeria Insurance, Omatek Ventures, Union Dicon Salt and Union Homes Savings & Loans and Universal Insurance Company.

    A circular obtained by The Nation indicated that the companies were suspended after they failed to file their accounts and operational reports as required by the listing rules at the Exchange. The suspension will remain in place until the companies file the relevant accounts and reports.

    With the suspension, investors will not be able to trade on the shares of the companies, thus denying them opportunities to raise funds through such investments in case of financial needs.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than 90 calendar days, or three months, after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 calendar days after the end of the relevant period.

    Most quoted companies including all banks, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year.  Not less than 83 per cent of quoted companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31. While March 31 is usually the deadline for submission of annual report for companies with Gregorian calendar business year, the deadline for the quarterly report is a month after the quarter.

    NSE tags and applies fines on companies that fail to meet earnings reports’ deadline. The Exchange had on January 1, 2017 launched its new sanction regime for delay in submission of companies’ results. Under the new sanction regime, companies may pay fines that range from N100, 000 to more than N100 million as penalties for delay in the submission of their corporate earnings reports.

    Companies that also delayed their financial statements and accounts face threats of suspension and delisting in addition to the monetary fines.

    Under the new rules, quoted companies will be required to file their unaudited quarterly accounts with the NSE not later than 30 calendar days after the relevant quarter, and publish it within five business days after the date of filing, in at least two national daily newspapers, and post it on the company’s website, with the web address disclosed in the newspaper publication. Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the newspaper publication. Where the company chooses to audit its quarterly accounts, it shall be required to file such accounts not later than 60 calendar days after the relevant quarter.

    For annual audited accounts, the new rules require companies to file their audited annual report and accounts with the Exchange not later than 90 calendar days after the relevant year end, and published in at least two national daily newspapers not later than 21 calendar days before the date of the annual general meeting, and posted same on the company’s website with the web address disclosed in the newspaper publications. Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the publication.

    Under the new rules, late submission under the first instance of 90 days could attract N9 million, the additional period of 90 days will attract N18 million while such delay beyond the first 180 days to the next 180 days could attract as much as N72 million, bringing fines payable by a defaulting company within a year to N99 million.

     

  • Stock Exchange may expel 56 inactive firms

    Stock Exchange may expel 56 inactive firms

    The Nigerian Stock Exchange (NSE) has marked out about 56 dealing-member firms as inactive, kick-starting the revocation of their licences and expulsion from the  stock market.

    The Nation had earlier reported exclusively the revocation and expulsion of 88 firms in the past five months.

    The Nation’s check at the weekend indicated that nearly a quarter of of firms at the Exchange has been marked as inactive, a reference to dealing firms on the watch-list for delisting.

    A breakdown of the status of dealing-member firms at the Exchange at the weekend showed that there were 197 active firms and 56 inactive. Already, a total of 163 firms have been expelled since capital market authorities began the weeding.

    Under the Exchange rules, where a dealing member is inactive for six months, the Exchange shall revoke its licence.

    “Under  no  circumstances  shall  a  dealing  member  cease  to  carry  out  its  day  to  day business activities for which it was licensed to operate without any reasonable cause,” according to the NSE’ rules.

    A dealing member may be deemed inactive voluntarily and involuntarily. Voluntary if the firm has not recorded any trading without suspension by the Exchange or Stock exchange Commission (SEC). Involuntary inactivity occurs where the firm has been suspended by the NSE or SEC for infraction.

    However, where a firm has been involuntarily inactive for six months, the Exchange can determine whether to revoke the firm’s dealing licence.

    “Where the Exchange revokes a dealing member’s licence, the Exchange shall immediately commence the process of expelling such dealing member,” the rules stipulated.

    Also, under the rules, suspension of any stockbroking firm by SEC will lead to immediate suspension by the NSE while revocation of any broker’s registration will lead to expulsion of the firm by the NSE.

    “Without  prejudice  to  all  the  remedies  open  to  the  dealing  member,  where  a  dealing member is suspended by the Commission, as soon as the Exchange is notified, it shall immediately  commence  the   process   of  suspension or  expulsion of   the   dealing member.

    “Where a Dealing Member’s registration is revoked by the Commission, as soon as the Exchange  is  notified,  it  shall  immediately  commence  the  process  of  expulsion  of  the dealing member,” the rules stated.

    The firms marked out as inactive included Adamawa Securities Limited, Aims Asset Management Limited, Arian Capital Management Limited, Bestlink Investment Limited, Bytofel Securities and Investment Limited, Cadington Securities Limited, CEB Securities Limited, Clearview Investments Company Limited, Covenant Securities and Asset Management Limited, Cradle Trust Finance and Securities Limited, ECL Asset Management Limited, Excel Securities Limited, Finbank Securities and Assets Management Limited, Gem Assets Management Limited, GMT Securities and Asset Mangement Limited, Gombe Securities Limited, Horizon Stockbrokers Limited, International Standard Securities Limited, Investment Shark and Asset Mgt Ltd, ITIS Securities Limited, Kakawa Asset Management Limited, LB Securities Limited, Lion Stockbrokers Limited, LMB Stockbrokers Limited, Mact Securities Limited, Mainland Trust Limited, Marimpex Finance and Investment Company Limited, Maven Asset Management Limited, Mercov Securities Limited, Midpoint Capital Limited, ML Securities Limited, Monument Sec and Finance Limited, Mutual Alliance Investment and Securities Limited and Northbridge Investment and Trust Limited.

    Others were Options Securities Limited, Partnership Securities Limited, Perfecta Investment and Trust Limited, PML Securities Company Limited, Professional Stockbrokers Limited, Profund Securities Limited, Redasel Investments Limited, Resano Securities Limited, Resort Securities and Trust Limited, Shalom Investment and Financial Services Limited, Stanwal Securities Limited, Summa Guaranty and Trust Company Limited, Supra Commercial Trust Company Limited, Surport Services Limited, Tower Asset Management Limited, Transafrica Financial Services Limited, and UIDC Securities Limited.

  • Stock Exchange expels 67 stockbrokers

    Stock Exchange expels 67 stockbrokers

    The  Nigerian Stock Exchange (NSE) has expelled 67 stockbrokers from the stock market.

    This regulatory action is aimed at weeding out unscrupulous and poorly capitalised stockbrokers.

    A regulatory report obtained at the weekend indicated that the expulsion was the final phase of delisting of the stockbroking firms, after their dealing licenses were revoked by the Exchange.

    A source at the Exchange said the expulsion followed recommendation of the Disciplinary Committee of the Council of the Exchange and the final approval of the National Council of the Exchange.

    The latest expulsion brought the number of stockbroking firms that have so far this year been expelled from Exchange to 88 stockbroking firms.

    The Nation last April reported the expulsion of 21 stockbroking firms for infractions ranging from poor capitalisation to unauthorised sales of investors’shares.

    With revocation of dealing licences and expulsion from the Exchange, the 67 stockbrokers will not be able to trade at the Exchange or function in any capacity as a stockbroking agent within the Nigerian capital market. Besides, all former top officials of the firms would have to go through special screening and approval before they could be employed by any other capital market operator.

    The expulsion also implies that the expelled firms will not be able to act as stockbroking agent in other countries that have Memorandum of Understanding (MoU) with capital market authorities.

    The authorities have standing bilateral agreements with several other jurisdictions, including Morocco, Angola, China, Ghana, Kenya, Malaysia, Mauritius, South Africa, Tanzania and Uganda.

    With the expulsion, investors who have their investment accounts with the expelled stockbrokers will be required to move their accounts to other functional stockbroking firms.

    The expelled stockbrokers included ATIF Securities Limited, Abacus Securities Limited, ABC Securities Limited, Akitorch Securities Limited, All Wealth Securities Limited, Apex Securities Limited, Asset Plus Securities Limited, Associated Securities Limited, Avon Finance and Securities Limited, Beachgroove Securities & Investments Limited, Broadedge Securities Limited, Bullion Securities Limited, Cardinal Securities Limited, City Investment Management Limited, Comment Finance & Securities Limited, Corporate Trust Limited, Crown Merchant Securities Limited, Dalgo Investment & Trust Limited, Devcom Securities Limited, Devserv Finance & Securities Limited, EBN Securities Limited, Equity securities Limited, Farida Investment and Finance Limited, Gilts and Hedge Finance Limited, Global Investment & Sec Limited, Goldworth Securities Limited, Haggai Investment & Trust Limited, Halsec Finance Limited, HP Securities Limited, Investicon Nigeria Limited, Investment Resources Limited, Island Securities Limited and Jenkins Investments Limited.

    Others included Kapital Securities Limited, Lozinger Securities Limited, M&M Securities Limited, M. J Securities & Investment Limited, Majestic Securities Limited, Matrix Capital Management Limited, MBA Securities Limited, MBCOM Securities Limited, Merchant Securities Limited, Metropolitan Trust Nigeria Limited, MMB Securities & Trust Limited, MMG Securities Limited, Nationwide Securities Limited, New Horizons Finance and Investment Limited, Nigbel Securities Limited, Omega Securities Limited, Omnisource International Limited, OpenGate Finance Company Limited, Pacific Securities Limited, Pamal Finance Limited, Peak Securities Limited, Prime Securities Limited, Prudent Stockbrokers Limited, Royal Securities Limited, Source Finance and Trust Company Limited, Supreme Finance & Investment Co. Limited, Synergy and Assets Trust Limited, Thomas Kinsley Securities Limited, Tradestamp Securities Limited, Trust Securities Limited, Unit Trust Securities Limited, Universal Securities Limited, Viva Securities Limited and Wintrust Limited.

    Capital market authorities had earlier in the year expelled 21 stockbroking firms including Allbond Investment Limited, Consolidated Investment Limited, Dakal Services Limited, Emi Capital Resources Limited, First Equity Securities Ltd, Ideal Securities Limited, Maninvest Asset Management Plc, Metropolitan Trust Nigeria Limited, Omas Investment & Trust Company Limited, Pennisula Asset Management & Investment Company Limited, Prudential Securities Limited, Securities Trading & Investments Limited, Transglobe Investment & Finance Company Limited, Tropics Securities Limited, Wizetrade Capital & Asset Management Limited, WT Securities Limited, and Zuma Securities Limited.

  • Stock Exchange delists UTC, Beco Petroleum, two others

    Stock Exchange delists UTC, Beco Petroleum, two others

    Authorities at the Nigerian Stock Exchange (NSE) yesterday delisted four companies that had repeatedly failed to meet corporate governance standards set by the Exchange. The four companies included UTC Nigeria Plc, Beco Petroleum Plc, MTECH Communications Plc and MTI Plc.
    A regulatory document on the delisting obtained by The Nation indicated that the delisting took effect May 2, 2017, although the national council of the Exchange had approved the delisting in February 2017.
    The NSE stated that the delisting was pursuant to clause 15 of the General Undertaking, Appendix III of the Rule Book of The Exchange, 2015-Issuers’ Rules, which deals with the post-listing requirements and sanctions.
    The Nation had earlier reported that not less than five, including three of the four delisted companies, were undergoing final delisting process.
    A source had told The Nation that the companies were delisted under the compulsory delisting mechanism of the Exchange after their failure to meet post-listing requirements on timely disclosures and corporate governance.
    The source said the companies were being delisted for recurring and irredeemable inability to comply with the listing requirements of the Exchange, especially in the areas of timely and accurate rendition of operational and financial accounts and other corporate governance issues.
    The source noted that the delisting process of some of the companies had started almost two years ago and the authorities at the Exchange had continuously engaged the companies with the hopes that they would regularise their operations but they had failed to make any convincing move to comply with listing requirements.
    The source pointed out that some companies that had been issued delisting notices but made significant efforts to comply have been rescheduled from delisting list to companies undergoing restructuring, noting that delisting is the final stage of several efforts made by the Exchange to encourage and incentivize compliance.

  • Stock Exchange suspends trading on Unic Insurance

    The Nigerian Stock Exchange (NSE) has placed UNIC Insurance Plc on full suspension, following approval of the scheme of arrangement that will lead to a restructuring of the insurance company under an investment holding company.

    Full suspension disallows both trading and price movement on a particular stock unlike technical suspension which allows trading without price movement.

    The NSE stated that the full suspension was in compliance with the process required for the approved scheme of arrangement between UNIC Insurance and shareholders of the insurance company.

    Already, the NSE has approved the rearrangement of UNIC Insurance under a new core investor and shareholding structure. The restructuring will allow the ailing insurance company to access capital through a new core investor.

    The scheme of arrangement included the plan by South Africa’s Liberty Holdings to acquire 75 per cent majority equity stake in Unic Insurance Plc for 160 million Rands, about $12 million and an equivalent of N3.72 billion. Liberty Holdings is an investment holding company and it already has investment in the Nigerian market through Total Health Trust.

    Chief executive officer, Liberty Holdings, Thabo Dloti recently outlined the group’s plan to expand into East and West Africa regions as part its strategy to grow its presence in West Africa through long-term insurance business and asset management business.

    “It may be having difficulties now, but everything indicates to us that in the long term Nigeria is going to be a big contributor of growth if you are doing business in Sub-Saharan Africa,” Dloti said.

    With more than five decades of operations, UNIC Insurance has struggled with declining performance in recent years. Like most insurance stocks, it has stagnated at its nominal price of 50 kobo at the NSE.

    Many analysts saw the merger and acquisition deal between UNIC Insurance and Liberty Holdings as a possible boost for the two companies.

    Although relatively low turnover-to-net assets ratios of most insurance companies may on one hand imply underutilization of shareholders’ resources, these also indicate significant headroom for underwriting capacity and growth on the other hand.

    Most analysts believe there is still much growth potential in the Nigerian insurance industry. From government to the National Insurance Commission (NAICOM) and to operators, insurance stakeholders have recently taken major steps to enliven the performance of the industry. The passage of the Nigeria Content Development Act and other laws on compulsory insurance by government has opened up tremendous business opportunities for insurance companies. The Local Content Act requires that all insurance risks associated with oil and gas sector including prospecting, exploration, drilling, constructions, shipping, distribution, marketing and transportation must be insured in Nigeria with registered Nigerian insurance company. This law alone represents immense opportunity for well-capitalised and stable insurance companies.

    Besides, NAICOM has also in recent period taken many far-reaching and proactive steps to standardize insurance operations and enforce conformity with best practices. NAICOM has introduced new accounting standards with more stringent provisions to ensure that insurance profit and loss accounts and balance sheet showed the true state of affairs. Insurers are also expected to make timely rendition of accounts, making their returns more predictable. With the broad provisions of the Insurance Act and related NAICOM guidelines, the tough stand of the insurance regulator has greatly improved the operating environment. The industry regulator is also leading the charge for compliance with existing compulsory insurance laws.

    Although still a highly fragmented industry with some 51 insurance companies, well-managed quoted risk companies stand to benefit both in the event of industry consolidation or market-driven competitiveness that places premium on security of insurance rather than lower rates. With estimated penetration of some seven per cent, Nigeria’s large population and expansive economy also put insurers on good footings.

  • Stock Exchange lists Nigeria’s $1b Eurobond

    Stock Exchange lists Nigeria’s $1b Eurobond

    The Nigerian capital market recorded a milestone yesterday with the listing of the $1 billion Eurobond issued by the Federal Government on the Nigerian Stock Exchange (NSE). The $1 billion FGN Eurobond issued under Nigeria’s newly established Global Medium Term Note programme is the first foreign currency denominated security to be listed and traded in the Nigerian capital market.

    The $1 billion Eurobond has a tenor of 15 years with redemption in 2032 and a coupon rate of 7.875 per cent. The issue was oversubscribed by 780 per cent, prompting the Nigerian government to set in motion process for a supplementary issue of $500 million.

    Director General, Debt Management Office (DMO), Dr Abraham Nwankwo, said the listing of the Eurobond demonstrated the commitment of the DMO and the government to democratize the enefits of government debt issues so that the general Nigerian investing public can have the opportunity to participate in the value creation.

    “We want to create access, we want to create inclusiveness,” Nwankwo said, adding that government is committed to deepening the domestic capital market.

    He pointed out that the net proceeds of the Eurobond would form part of the funding for the 2016 capital expenditures as outlined in the national budget, assuring that Nigerians will see the benefits of the foreign debt issuance in the areas of key infrastructure projects.

    He assured that the government has enough monitoring agencies to ensure that the net proceeds from the debt issue is used in line with the stated objectives and the overall economic plan of the government.

    He also noted that the government would also continue to be mindful of the crowding out effect of its domestic bond issue, pointing out that the decision to shift the larger portion of debt issue to the international market was a deliberate attempt to decelerate domestic issuance and allow corporate issuers to take more advantage of the market after it has been developed by the government.

    In his remarks, executive director, market operations and technology, Nigerian Stock Exchange (NSE), Mr Ade Bajomo noted that Nigeria’s infrastructural gaps have long been identified as probably the core constraint limiting the realisation of the country’s economic potential.

    According to him, the achievement and sustainability of Nigeria’s growth and developmental objectives depends on a well-functioning and efficient capital market; enabling aggregation of – and access to – long term capital to support business and developmental needs.

    He reiterated the commitment of the NSE to supporting the government in achieving its developmental objectives by continuous innovation and championing the growth of the Nigerian capital market.

    “The Exchange offers issuers access to a highly diversified investor base, deep pools of capital, a wide and growing breadth of products to meet their specific business financing needs, as well as global visibility to support their corporate ambitions; whilst also ensuring adequate protection, transparency, and liquidity to investors,” Bajomo said.

    He pointed out that as a foreign-denominated instrument, the Eurobond will trade and settle in Dollars, its currency of issuance; thus setting the foundation for multicurrency capital raising and trading in the domestic market, which will open up hybrid capital raising options and create additional portfolio diversification opportunities for investors.