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Tag: subsidiaries

  • South Africa’s insurance firm to sell some subsidiaries

    South Africa’s Liberty Holdings is considering the sale of some businesses bought in previous years as part of expansion-focused strategy.

    The insurer, a unit of Standard Bank in the middle of a turnaround plan, said it had placed asset management and short-term insurance operations in a number of African countries, as well as health insurance arm Liberty Health, under “ownership review”.

    It made the announcement while reporting a 17 per cent drop in headline earnings in 2018, which dampened progress in the first full year of its turnaround strategy and prompted a three per cent drop in its share price.

    Liberty’s CEO David Munro said the move to review and potentially sell some of the businesses would refine the company’s portfolio.

    “It’s these kind of steps that we’re taking that will… make sure that each of the businesses in the portfolio can deliver growth for Liberty and our shareholders,” he told Reuters in a telephone interview.

    He declined to give a time frame for possible sales, but said negotiations were currently underway.

    Munro took the helm in 2017 and has since then, with the backing of Standard Bank, worked to slow the acquisition-fuelled expansion drive which preceded his appointment to focus on Liberty’s home market – a move that had delivered rising profit.

    The units under review have been deemed no longer central to the new strategy, and include asset management operations in Ghana, Uganda, Kenya and Botswana and short-term insurance businesses in Malawi and Namibia.

    Liberty’s share price fell by around three per cent on the news that its headline earnings per share -the most widely watched profit measure in South Africa – had fallen to 817.9 cents from 982.1 cents in 2017.

    At 09:26 GMT, it had recovered some losses to stand at 101.98 rand per share, down 1.7 per cent.

    Munro said the more salient part of the results was a 42 per cent rise in normalised operating earnings, as this captured the performance of its core operations – South African insurance and asset management.

    “We’ve made really significant progress in turning around our business,” he said, adding that the results go a long way to restoring shareholders’ confidence.

    The headline number was pulled down by more than 80 percent slump in earnings in a portfolio Liberty uses to invest the capital it has to hold against its insurance operations, to 250 million rand ($17.93 million).

    Munro said this was the result of a “disastrous” year from investors’ perspective, characterised by market volatility and low returns.

  • UBA projects 50% profit contributions by subsidiaries

    United Bank for Africa (UBA) Plc expects its operations in 18 other African countries to account for half of its earnings over the next three years, its Chief Financial Officer Ugochukwu Nwaghodoh has said.

    Bloomberg reports that the bank injected more than $100 million into its units in the Democratic Republic of Congo, Benin, Ivory Coast, Tanzania and Mozambique to help them expand. The cash, pumped into the operations over July and August, will start having a “full effect” on income from this year, Nwaghodoh said.

    UBA expects contributions from its foreign branches to increase from 45 percent last year even as the operations in its home market continue to grow, he said.

    Nigeria’s third-largest lender by revenue raised $500 million selling Eurobonds last year to fund its expansion as the economy of Africa’s biggest oil producer recovered from a 2016 contraction after a slump in crude prices triggered a foreign-currency shortage.

    It is targeting an improvement in its return on equity, a measure of profit, to 18 percent this year from 16 percent in 2017, the CFO said. UBA will “defend” its net interest margin in Nigeria amid declining interest rates by reducing what it pays depositors for their savings, Nwaghodoh said.

    “The loan-to-deposit ratio today is 60 percent, so I have a lot of liquidity, and can dictate the price at which to take deposits,” he said.

    In Ghana, UBA is looking to boost its operations and increase the capital beyond the minimum 400 million cedis ($90 million) that regulators require, Nwaghodoh said. It will bolster the buffers by capitalizing earnings, in which it transfers surplus income to its capital holdings, within the unit for 2017 and mid-year 2018, he said.

     

  • FirstBank strengthens foreign subsidiaries for higher returns

    First Bank of Nigeria Limited has strengthened its offshore subsidiaries.

    The lender expects its foreign branches to make at least 10 per cent contributions to its bottom-lineits Managing Director/CEO, Adesola Adeduntan, disclosed yesterday.

    Speaking during a meeting with editors in Lagos, the bank chief said the Tier-1 lender recruited experienced staff with international banking exposures  to run its foreign subsidiaries.

    With such experienced hands, Adeduntan said, the bank expects such subsidiaries to make positive contributions to the groups’ bottom line this year.

    “We have strengthened governance and management in all the subsidiaries, with more of the key staff now having international banking exposure. We have given them all the tools they need and we expect them to start contributing. We expect them to in the next five years, contribute 10 per cent to the bottom-line,” he said.

    Adeduntan said that in 2017, contributions by offshore subsidiaries to were negative, but the new management has strengthened offshore operations of subsidiaries, recruited top managers and expect them to begin to yield results this year.

    He disclosed that the banking industry is recovering, with liquidity also improving as crude oil prices rose by over 100 per cent, leading to positive impact on lenders’ liquidity positions.

    He said the bank has improved on its Non-Performing Loan position, from 30 per cent to 20 per cent and has a target of further taking it down to 10 per cent in the nearest future.

    He said the bank is driving retail, consumer lending and Small and Medium Enterprises (SMEs). According to him, “the bank’s non-performing loans were at 30 per cent, dropped to 20 per cent and the bank wants to bring it further down to where it should be. We should be less than 10 per cent in NPL at the end of this cycle”.

    The FirstBank boss said the lender is transforming its operations, with digital banking adoption.

    Adeduntan said the bank’s Unstructured Supplementary Service Data (USSD) on *894# has processed more than N1 trillion transactions, adding that over 80 per cent of transactions done in the bank is digital. The transactions, he added, are carried out through alternative banking platforms like FirstMobile, FirstOnline and Automated Teller Machines (ATMs).

    He said the bank expects rapid growth in the non-oil sector, adding that it has also lowered its cost to income ration.

    On bringing new customers to the bank, the bank chief said: “We do a lot of screening now before taking in new customers.  We are the biggest lender to Small and Medium Enterprise (SMEs). Our market capitalisation has risen by N300 billion and we want to ensure that the valuations get to where it should be,” he said.

  • World largest brewer concludes merger of Nigerian subsidiaries

    World largest brewer concludes merger of Nigerian subsidiaries

    •Lists shares on NSE

    Anheuser-Busch InBev-world’s largest brewer yesterday completed the merger of its Nigerian businesses with the listing of the consolidation shares on the Nigerian Stock Exchange (NSE).

    Three indirect Nigerian subsidiaries of Anheuser-Busch InBev-International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited were merged through a scheme of merger with International Breweries subsisting as the post-merger company.

    A total of 5.302 billion ordinary shares were listed yesterday in the name of International Breweries. The additional shares arose from the scheme of merger involving International Breweries, Intafact Beverages Limited and Pabod Breweries Limited.

    With the supplementary listing of 5.302 billion ordinary shares, the total issued and fully paid up shares of International Breweries increased from 3.294 billion to 8.596 billion ordinary shares.

    Under the arrangements for the business combination, International Breweries issued 5.302 billion ordinary shares of 50 kobo each to shareholders of Intafact and Pabod. Intafact had total issued shares of 1,400 ordinary shares of N100,000 each while Pabod had 4.0 billion ordinary shares of N1 each.

    The share exchange ratio indicated that 29.09 million ordinary shares of International Breweries were exchanged for 10 ordinary shares of Intafact while 3,071 ordinary shares of International Breweries were exchanged for 10,000 ordinary shares of Pabod.

    With the business combination, Anheuser-Busch InBev’s majority equity stake in International Breweries Plc, has increased to 75.1 per cent. The merger was seen as a major strategic move by Anheuser-Busch InBev to upend competition and consolidate its Nigerian base for further expansion into the Sub-Saharan Africa (SSA).

    Under the arrangement, all assets, liabilities and undertakings of Intafact and Pabod including employees, real property and intellectual property rights were transferred to International Breweries upon the completion of the proposed merger.

    Prior to the merger, Anheuser-Busch InBev held 72.17 per cent majority equity stake in International Breweries through its subsidiary-Brauhaase International Management GMBH. After the business combination, Anheuser-Busch InBev’s majority equity stake increased to 75.1 per cent.

    SABMiller Nigeria Holdings BV-a subsidiary of Anheuser-Busch InBev had held 75 per cent and 82.81 per cent majority equity stake in Intafact and Pabod respectively. Ministry of Finance of Anambra State held 10 per cent equity stake in Intafact while Ministry of Finance Incorporated of Rivers State held 14.52 per cent equity stake in Pabod.

    After the merger of the three companies-SABMiller Nigeria Holdings BV and Brauhaase International Management GMBH-two subsidiaries of Anheuser-Busch InBev, now hold 47.4 per cent and 27.7 per cent equity stake respectively in International Breweries, giving the foreign majority core investor controlling equity stake of 75.1 per cent. Ministry of Finance of Anambra State now hold 4.7 per cent equity stake while other minority shareholders now hold the remaining 20.2 per cent equity stake.

    The merger is believed to be a major competitive move by Anheuser-Busch InBev to give its operations a major nationwide push to increase its market share. International Breweries is located in Ilesa, Osun State in the South West region. Intafact Beverages’ brewery is ssituated in Onitsha, Anambra State in the South-East region while Pabod Breweries is located in Oginigba, Port Harcourt, Rivers Sate in the South-South region.

  • Diamond Bank to sell foreign subsidiaries

    Diamond Bank to sell foreign subsidiaries

    Diamond Bank is quitting other West African markets to focus efforts at home and deploy its resources on personal banking business, it said yesterday.

    The move by Diamond Bank ends the mid-tier lender’s 18-year push abroad.

    Diamond Bank has agreed to sell its operations in Benin, Togo, Cote d’Ivoire and Senegal to Manzi Finances S.A., a Cote d’Ivoire-based financial services holding company. Regulatory approvals have been obtained in all jurisdictions for the transaction, which is anticipated to close before December 31, 2017.

    “After 18 years of building the Diamond Bank franchise in other markets in West Africa, the time has come to fully apply our resources to Nigeria,” Diamond Bank Chief Executive Uzoma Dozie said in a statement.

    It said it wanted to apply its resources to Nigeria to develop a profitable technology-driven retail banking business.

    The bank said yesterday it had agreed to sell its operations in Benin, Togo, Cote d‘Ivoire and Senegal to a Cote d‘Ivoire-based financial services company, Manzi Finances S.A., for 61 million euros. It expects the deal to close this year.

    Diamond Bank posted a 71.5 per cent rise in nine-month pretax profit to N6.67 billion in September.

    Several lenders have adapted their business models after low crude prices put pressure on the once lucrative oil and gas loan book. Nigeria exited recession in the second quarter but growth is fragile.

    Dozie said Nigeria’s unbanked population and the rise of cost-effective digital banking platforms provided it with the opportunity to reach millions of customers in a market where it already had over 15 million clients.

    Diamond shares, which have risen 15 per cent so far this year, climbed five per cent yesterday to N1.06. They had fallen 62 per cent last year. Fundamentally, this strategy stands to benefit all the key stakeholders – shareholders, customers and employees – in the immediate, medium and long term.

  • Multinationals to inject N300b in subsidiaries

    Global manufacturing giants have indicated interest in injecting about N300 billion into their operations to consolidate their market share in the key sectors of the economy.

    The Nation’s check at the weekend showed a pipeline of about six major equity investments by foreign majority core investors in six quoted companies, with nearly half of the transactions already undergoing issuance.

    LafargeHolcim, world’s leading building material company, plans to inject N102 billion in its Nigeria-based pan-African operations, Lafarge Africa Plc. Unilever Plc, United Kingdom, will inject N38 billion in Unilever Nigeria Plc. Diageo Plc, United Kingdom, plans to take up additional N21 billion in Guinness Nigeria. Heineken BV was said to be considering injecting more than N15 billion in Nigerian Breweries while world’s largest brewer, Anheuser-Busch InBev plans to invest some N125 billion in its Nigerian operations.

    Most of the recapitalisations are expected to be done through supplementary share issuance to existing shareholders, otherwise known as rights issue. With this, the shares will be pre-allotted to existing shareholders on the basis of their existing shareholdings. Three of the companies-Guinness Nigeria, Lafarge Africa and Unilever Nigeria have already secured the crucial shareholders’ approval to undertake the rights issue.

    LafargeHolcim, which holds the majority equity stake of 72.59 per cent in Lafarge Africa, has already formally indicated it will subscribe fully to its rights under the N140 billion rights issue approved by shareholders for the Nigerian subsidiary. The Lafarge Africa’s rights issue is the largest so far in the Nigerian capital market and LafargeHolcim’s N102 billion investment is reported to be the largest investment in a listed company by an investor.

    With the approval by shareholders, the N140 billion Lafarge Africa’s rights issue is expected to be launched in late September and finalised by the fourth quarter. LafargeHolcim will pick up its rights under a debt-for-equities deal that will see conversion of LafargeHolcim’s dollar-based loan to equities.

    Diageo, which holds the majority equity stake in Guinness Nigeria, is expected to inject more than N21 billion into the Nigerian company under a N39.7 billion rights issue. Already, Guinness Nigeria has secured the approval of the Nigerian Stock Exchange (NSE) to undertake the rights issue, after it had received unanimous endorsement of the shareholders at an extraordinary general meeting held earlier this year.

    Under the plan, Guinness Nigeria will be offering 684.495 million ordinary shares of 50 kobo each to shareholders at a price of N58 per share. The rights’ shares will be pre-allotted on the basis of five new ordinary shares for every 11 ordinary shares held as at March 15, 2017.

    Diageo had earlier indicated interest in acquiring additional shares of up to 15.7 per cent in Guinness Nigeria through its wholly owned subsidiary, Guinness Overseas Limited. It however backed down from the direct acquisition. An investment analyst in the know said the foreign core investor might have considered rights issue as a less expensive option to achieving the same objective.

    Unilever UK, which holds 60.06 per cent majority equity stake in Unilever Nigeria through its Unilever Overseas Holdings BV, is expected to inject about N38 billion into the Nigerian subsidiary under a new capital raising programme already approved by the shareholders of the fast moving consumer goods company.

    Shareholders of Unilever Nigeria recently approved a proposal by the board of the company to raise up to N63 billion in new equity funds by selling new shares to existing shareholders. In preparation for the rights issue, shareholders also increased the authorised share capital of the company to N5 billion or 10 billion shares through the creation of additional 3.95 billion ordinary shares of 50 kobo each.

    Unilever UK has shown sustained interest in increasing its majority shareholding in the Nigerian subsidiary. It mopped up additional shares through open market purchases at the NSE to increase its majority stake by 1.53 per cent from 58.53 per cent in 2015 to 60.06 per cent in 2016. It had also made open market purchases in 2015.

    Unilever UK will be required to contribute at least N37.84 billion to the rights issue to retain its current shareholding and the multinational may increase its stake by applying for additional shares from renounced rights.

    Unilever UK had earlier indicated it intended to acquire up to 75 per cent controlling equity stake in the Nigerian subsidiary. Unilever UK had in first half of 2015 sought to increase its majority equity stake in the Nigerian subsidiary from 50 per cent to 75 per cent, citing long-term strategic importance of Unilever Nigeria to its global business.

    In a transaction initially valued at about N43 billion or £144.5 million, Unilever Overseas Holdings sought to increase its equity stake in the Nigerian company from 50.04 per cent up to a maximum of 75 per cent by buying additional shares from minority shareholders. The tender offer sought to acquire about 942.42 million ordinary shares in Unilever Nigeria at a price of N45.50 per share in cash.

    In a statement signed by Richard Hazell, Director, Unilever Overseas Holdings B.V, Unilever had said it was making the additional share acquisition as part of long-term strategic plan by the conglomerate as it believes that Nigeria offers significant growth potential.

    “The Unilever Group has had a major presence in Nigeria for many years and continues to believe that the country offers significant growth potential. This makes Nigeria a strategic long term investment priority for Unilever Overseas. Globally, the Unilever Group is focused on investing in the foods, household and personal care categories and the long heritage and great brands of Unilever Nigeria in these categories in Nigeria make it attractive for Unilever Overseas to increase its holding in Unilever Nigeria, whilst maintaining its stock exchange listing,” Unilever stated in the statement enclosed in the tender offer.

    Nigerian shareholders however largely shunned the N43 billion share-acquisition bid as it recorded less than a third of its target. At the conclusion of the tender offer, Unilever UK’s total shareholdings in Unilever Nigeria only increased by 8.49 per cent from 50.04 per cent to 58.53 per cent. The increase also included open market purchases.

    World largest brewer, Anheuser-Busch InBev has unveiled plan to merge its Nigerian businesses and invest some $400 million, about N122 billion, in Nigeria in a major strategic move to consolidate its Nigerian base for further expansion into the Sub-Saharan Africa (SSA).

    Under the arrangement, three indirect Nigerian subsidiaries of Anheuser-Busch InBev-International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited, will be merged through a scheme of merger. International Breweries is expected to be the subsisting post-merger company. The proposed merger has been approved by the board of International Breweries.

    A regulatory notice on the merger has already been filed at the NSE, kick-starting the merger process after the approval of the business combination by directors of the companies.

    The merger is believed to be a major competitive move by Anheuser-Busch InBev to give its operations a major nationwide push to increase its market share. International Breweries is located in Ilesa, Osun State in the South West region. Intafact Beverages’ brewery is ssituated in Onitsha, Anambra State in the South-East region while Pabod Breweries is located in Oginigba, Port Harcourt, Rivers Sate in the South-South region.

    Anheuser-Busch InBev has also publicly indicated its plans to spend $400 million in establishing a major brewery in Nigeria as it moves to take on the two main Nigerian beer market leaders- Nigerian Breweries and Guinness Nigeria.

    In a bid that was pushed through by voting through poll, shareholders of Nigerian Breweries (NB) have also approved a share-for-dividend option that will see qualifying shareholders receiving new ordinary shares in the company instead of the final cash dividend, on terms and conditions as the board may determine based on prevailing market conditions. Nigerian Breweries earmarked N28.4 billion as cash dividend for the 2016 business. In poll voting, shareholders vote on the basis of shareholdings rather than the voice vote or “show of hands” voting in non-contentious issues. A poll-voting thus can only succeed with the support of the majority core shareholder.

    Head, equity capital market, PanAfrican Capital, Mr. Babatunde Oyekunle, said the new investments by the foreign investors are part of proactive plans to consolidate their Nigerian businesses and position them for expected growth in the Nigerian economy.

    According to him, the new capital injections reflect the beliefs of the foreign major investors in the prospects of the Nigerian economy in the long-term.

    He pointed out that such major investments by multinationals are usually proposed after exhaustive mid-to-long-term research and consideration of all variables including macroeconomic outlook, political risks and market size.

    “These investment proposals show they believe in Nigeria; the growth and potential of the economy. Most pundits agreed on the enormous potential of the Nigerian economy, the market is here and the headroom for growth is huge,” Oyekunle said.

     

  • ‘NNPC, subsidiaries must adopt financial controls, transparency’

    ‘NNPC, subsidiaries must adopt financial controls, transparency’

    The Natural Resource Governance Institute (NRGI) has advised the management of the Nigerian National Petroleum Corporation (NNPC) to adopt proper financial controls, transparency measures in all of its subsidiaries, if it intends to be profitable.

    The Institute in a report said despite the current global low oil prices, the Corporation could still net several billions of dollars per year for the nation’s treasury if it follows certain standard operational steps in its reforms.

    It said the government must first put in place a clear, legally enforceable rule that will govern revenues the NNPC can keep, adding that previous efforts at reforming and restructuring the NNPC did not follow this step.

    The NNPC must adopt new financial controls and transparency measures for its subsidiaries. This will apply not only to the Nigerian Petroleum Development Company (NPDC), but equally to the Corporation’s half-dozen oil trading subsidiaries, none of which the Institute disclosed what they earn or how they share earnings.

    The group said there is no public accounting for the money that NNPC’s downstream arm, the Pipelines and Product Marketing Company (PPMC), makes from selling refined products including the billions of dollars in gasoline imported each year through oil-for-product swaps

    In the NRGI report made available to The Nation, the Director, Governance Programmes, Alexandra Gillies said the domestic crude allocation should be eliminated by the government, and agree to a new way of supplying oil to the refineries as part of its efforts to find new ownership and management structures for them. She noted that NNPC could remain the largest or even sole supplier under several different models.

    These include tolling, where the NNPC would grant the refineries operational independence and lease refining capacity from them in exchange for crude; repurchase agreements, where the Corporation would buy crude from its upstream partners on behalf of the refineries; or further inter-company sales, with volumes restricted at the refineries’ actual needs instead of 445,000 barrels per day – an amount she said far exceeded the small volumes (often under 100,000 bpd) they can process.

    She said if the NNPC continues to do oil-for-product swaps; it could simply allocate parts of its regular export sales to those deals.

    The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu had announced the unbundling or restructuring of the Corporation into  seven divisions and 30 independent companies with their own managing directors. Gillies agreed it was a step toward turning NNPC into a more appropriately-sized, profit-driven firm, but nevertheless pointed out the proposal did not explain how the new companies would fund their operations or share their earnings with the government.

    She said such a rule was also missing from the current plans to break the long delayed Petroleum Industry Bill (PIB) into smaller pieces for passage, adding drafts of a first, senate-led installment were already making the rounds. However, senate leadership said debate would start soon.

    She noted the new bill envisions an NNPC split into two partially privatized companies: the Nigeria Petroleum Assets Management Company and a national oil company. She said the latest drafts talk variously about these entities retaining unspecified shares of earnings, charging the government ‘management fees,’ receiving federal budget appropriations to cover some un-enumerated costs, and paying dividends to the Federation Account based on policies to be agreed down the road.

  • FCMB eyes higher earnings for subsidiaries

    FCMB eyes higher earnings for subsidiaries

    FCMB Group Plc has projects that its subsidiaries are well positioned to grow strongly this year. The concerned firms are First City Monument Bank (FCMB) Limited, FCMB Capital Markets Limited and CSL Stockbrokers Limited.

    In a statement, the holding company said its subsidiaries would also deepen the financial services support they provide to customers and the nation at large with their array of products and bespoke solutions to further enhance customer experience in their respective target markets.

    Managing Director of FCMB Group Plc, Peter Obaseki, said, ‘’2016 will be characterised by continued growth in retail contribution, stabilisation of wholesale banking revenues and increased focus on cost efficiencies’’.

    He added that the retail banking business of the Group, which is driven by First City Monument Bank (FCMB) Limited, has continued to ‘’show greater resilience and earnings momentum over the years’’.

    He disclosed that FCMB Group Plc would in the fourth week of January this year announce the completion of the banking subsidiary’s interim audit, which should pave way for the release of the 3Q15 earnings results of FCMB Group Plc.

    He said third quarter 2015 earnings will fall below earnings for the same period in 2014, due to a spike in impairments particularly in the energy sector and the significant reduction in trade finance-related revenues due to foreign exchange illiquidity. This trend, he added, will continue December 2015 and largely emanated from wholesale banking activities’.

    The Group Managing Director/Chief Executive Officer of the Bank, Ladi Balogun, said: ‘’we will continue to do the things we are doing well; driving low cost deposit growth, in order to bring down the cost of funds, through increased acquisition and collections.  We will also continue to raise our performance in customer service by building a vibrant, credible and relevant banking brand that everyone wants to bank with. Overall, we are confident this progress and momentum will be sustained, as we continue to grow our market share through service excellence while improving our efficiency ratios’’.

  • PZ Cussons to combine two subsidiaries

    PZ Cussons Nigeria Plc is undertaking a major corporate restructuring aimed at streamlining its operations and curtailing costs.

    Regulatory filing showed that the Board of Directors has resolved to embark on a corporate restructuring with a view to simplifying the company’s structure and operations.

    The restructuring involves business combination of two of PZ Cussons Nigeria’s subsidiaries – PZ Power and PZ Tower with the parent company. The business combination would be effected through a scheme of arrangement.

    According to the conglomerate, the restructuring would lead to reduction in administrative costs while simultaneously improving operational efficiency.

    However, the proposed merger will be subject to the receipt of the appropriate approvals from the Securities and Exchange Commission and the Federal High Court.

    PZ Cussons Nigeria recently recommended distribution of N794.1 million to shareholders as interim dividends for the current year ending May 31, 2015. The dividend recommendation was part of the third quarter interim report and accounts of the conglomerate released yesterday.

    According to the report, shareholders on the register of the company as at the close of business on March 31, 2015 will receive a dividend per share of 20 kobo, which will become payable on April 7, 2015.

    Key extracts of the nine-month accounts for the period ended February 28, 2015 showed marginal growth in sales amidst notable decline in the bottom-line. While sales rose by 0.56 per cent, pre and post tax profits dropped by 22.85 per cent and 27.91 per cent.