NSE OPENS FUNDING WINDOW FOR PRIVATE, UNLISTED PUBLIC FIRMS
Private and unlisted public companies now have wider access to amenable funding through the capital market as the NASD OTC Securities Exchange Plc launches a portal that provides access to capital to pre-initial public offering (IPO) companies.
Pre-IPO companies include micro, small and medium enterprises and emerging growth companies, either as a private limited liability company or public limited liability company, that have not issued their maiden public share issuance, otherwise known as IPO.
A report obtained by The Nation indicated that the pre-IPO market would enable private and unlisted public companies seeking amenable funds for growth to source capital through the NASD platform.
Inaugurated in July 2013, NASD is registered by Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) as a Self-Regulatory Organisation (SRO). It provides the platform for trading of a broad range of instruments over-the-counter (OTC), including equities, bonds and other securities not listed on a formal general securities exchange.
According to the report, the portal opens the capital market to pre-IPO companies, which are seeking to interact with a limited number of single, non-bank financiers such as private equity firms and asset managers.
The pre-IPO market is also expected to give growth companies the needed capital market support that will ensure their long-term sustainability and ultimately increase the level of listings in the sub- Saharan region.
SEC had in April, last year granted NASD a no-objection approval, paving the way for the OTC platform to operate a restricted primary market for pre-IPO companies and accredited investors.
With more than 90 per cent of businesses in Nigeria classified within micro, small and medium enterprises (MSMEs) category, access to finance has been a major recurring challenge. The growth of MSMEs is seen as a centrifugal force to the attainment of national job security and growth.
The launch of the pre-IPO market is also expected to increase participating companies on the NASD as other capital market professionals can register and advise on the new pre-IPO portal while more pre-IPO companies are expected to evolve gradually to share issuance and listing.
Already, many leading private and unlisted public companies are listed on the NASD. These included Dufil Prima Foods Plc, the manufacturer of Indomie Noodles; Friesland Campina Wamco Nigeria Plc, manufacturer of Peak Milk brand; and Fan Milk Plc, popular manufacturer of Fan Yoghurts, NIPCO Plc, the majority core investor in 11 Plc, formerly known as Mobil Oil Nigeria Plc; Air Liquide Nigeria Plc Industrial & General Insurance Plc, Central Securities Clearing System Plc, the clearing and depository arm of the Nigerian Stock Exchange (NSE); Nigeria Mortgage Refinance Company, Acorn Petroleum Plc, ARM Life Plc, Afriland Properties Plc, BGL Plc, Consolidated Breweries Plc and Food Concepts Plc.
Others included Geo-Fluids Plc, Golden Capital Plc, Niger Delta Exploration & Production Plc, Partnership Investment Company Plc, Resourcery Plc, Riggs Ventures West Africa Plc, Swap Technologies & Telecomms Plc, Vital Products Plc, Fumman Agric Products Industries Plc, Free Range Farm Plc, FAMAD Plc, AG Mortgage Bank, Trustbond Mortgage Bank Plc, Mass Telecom Innovation (MTI ) , Providus Bank and Great Nigeria Insurance among others.
NASD had grown its trading commission by 481.32 per cent to N134.4 million in 2018 as increased trading activities lifted the performance of OTC platform. Trading commission rose from N23.1 million in 2017 to N134.4 million in 2018 due to increase activities carried out on the OTC platform.
CBN INJECTS $311.5 MILLION, CNY 15 MILLION INTO RETAIL SMIS
The Central Bank of Nigeria (CBN) on Friday made an intervention of $311.5 million in the retail Secondary Market Intervention Sales (SMIS) and CNY 15 million in the spot and short-tenored forwards segment of the inter-bank foreign market.
The Director, Corporate Communications Department at the CBN, Isaac Okorafor, confirmed the latest injection, disclosing that “the dollar interventions were for customers in the agricultural, airlines, petroleum products and raw materials and machinery sectors, while the yuan component was for payment of renminbi denominated letters of credit for agriculture as well as raw materials”.
Okorafor further said that the market continued to enjoy stability, owing to the regular interventions by the bank, which he said has also guaranteed a stable exchange rate for the Naira. He assured that the bank’s management would remain committed to ensuring that all the sectors of the forex market continue to enjoy access to the needed foreign exchange.
Meanwhile, $1 exchanged for N357 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY1 exchanged at N47.
FIRST BANK PARTNERS NESG ON ECONOMIC SUMMIT
As part of its continued commitment to create an enabling environment and opportunities for the promotion of sustainable growth and development of the economy, First Bank of Nigeria Limited has partnered The Nigerian Economic Summit Group (NESG) to host the 25th Nigerian Economic Summit (NES#25), its yearly flagship event.
The Silver Jubilee edition of the summit has: Nigeria 2050: Shifting gears as theme; it is scheduled to hold between October 7 and 8 at Transcorp Hilton, Abuja.
President Muhammadu Buhari, Vice President Yemi Osinbajo and Minister for Finance, Budget & National Planning, Mrs. Zainab Ahmed, are expected to grace the occasion.
Other dignitaries are Senate President Dr Ahmad Ibrahim Lawan, Hon. Femi Gbajabiamila, Speaker of the House of Representatives and Mrs. Amina J. Mohammed, Deputy Secretary-General of the United Nations. The Chief Host is Mr Asue Ighodalo, Chairman, the Nigerian Economic Summit Group.
Chairman, First Bank of Nigeria Limited, Mrs Ibukun Awosika, would speak on Gender Empowerment at the plenary.
Panelists at the forum include Central Bank of Nigeria Governor, Mr Godwin Emefiele; President/CEO Dangote Group, Alhaji Aliko Dangote; Bishop Matthew Kukah; Nigeria Governors Forum Chairman, Dr Kayode Fayemi; Emir of Kano, Muhammadu Sanusi II; Speaker, Oyo State House of Assembly, Hon. Adebo Ogundoyin; Awosika; member, ICPC, Mrs Hannatu Mohammed; CEO, GIG Group, Mr. Chidi Ajaere; CEO, Jumia Nigeri, Mrs Juliet Anammah, and MD/CEO, Nestle Nigeria Plc, Mr Mauricio Alarcon.
The event is billed to comprise plenary sessions, exhibitions, design workshops, dinner and the anniversary lecture as well as the presentation of awards and prizes to winners of the NES #25 essay competition and start-up pitching event.
2020 BUDGET: 3% ECONOMIC GROWTH POOR – SENATOR BASSEY
Senator Bassey has called for the increase of the oil benchmark from $55 per barrel to $65 per barrel so as to have more money to inject into the economy.
Senator Bassey, who represents Cross River South Senatorial District and a member of the Senate Committee on Finance argued that injecting money into the economy would help in the provision of infrastructure, security as well as other critical sectors.
His suggestion is coming on the heels of the Extraordinary Federal Executive Council, FEC, meeting to be presided over by President Muhammadu Buhari today at the Presidential Villa on the 2020 Budget.
According to him, “We have seen an economic growth that is less than three per cent. For a developing country, 2020 Budget of three per cent economic growth is poor, it is not good enough.
China has a growth rate of five and six per cent, India has a growth rate of nine to ten per cent. So for a developing country that wants to get to where we want to get to, a two to three per cent economic growth rate is very poor.
But where is the money? The money is there. If you raise the oil benchmark from $55 per barrel to $65 per barrel bearing in mind that the average price of crude oil has gone to $70 per barrel.
“We easily realize enough money to begin to invest in some of these critical areas. So, my proposal is that the Finance Committee considers raising the benchmark for crude oil for the purposes of this budget from $55 per barrel to $65 per barrel in 2020 budget.
CBN’S PUNITIVE MEASURES HIT HARD BANKS STOCKS
The nigerian equities market suffered its worst week since april, as the impact of the central bank of nigeria’s (cbn) punitive measures on 12 banks for failing to meet the new loan-to-deposit ratio floor (ldr) (previously 60.0 per cent, recently revised to 65.0 per cent), weighed down on banking stocks. Consequently, the all-share index declined by 2.5 per cent to 26,987.45 points, and settled the ytd return at -14.1 per cent while market capitalisation closed at n13.137 trillion at the end of the trading week.
The market opened for four trading days this week as the federal government declared Tuesday october 1, 2019 a public holiday to mark the nations 59th independence anniversary. Meanwhile, a total turnover of 660.654 million shares worth n9.189 billion in 12,032 deals were traded this week by investors on the floor of the exchange in contrast to a total of 1.097 billion shares valued at n16.693 billion that exchanged hands in the previous week in 14,717 deals. Analysing by sectors, banking (-3.9 per cent) index recorded its largest decline since the week ended august 9, 2019 , with the consumer goods (-4.9 per cent), and oil & gas (-2.3 per cent) indices following suit. Conversely, the insurance (+5.7 per cent) and industrial goods (+0.1 per cent) were the only indices to post positive performances.
The financial services industry (measured by volume) led the activity chart with 458.190 million shares valued at n5.905 billion traded in 6,720 deals; thus contributing 69.35 per cent and 64.27 per cent to the total equity turnover volume and value respectively. The conglomerates industry followed with 55.804 million shares worth n124.513 million in 545 deals while the construction/real estate industry posted a turnover of 54.330 million shares worth n62.585 million in 135 deals. Trading in the top three equities namely, guaranty trust bank plc, access bank plc and fbn holdings plc. (measured by volume) accounted for 280.714 million shares worth n4.909 billion in 2,985 deals, contributing 42.49 and 53.43 per cent to the total equity turnover volume and value respectively. Fifteen equities appreciated in price during the week, lower than 22 equities in the previous week. Thirty-nine equities depreciated in price, lower than 42 equities in the previous week, while 112 equities remained unchanged, higher than one 102 equities recorded in the preceding week.
Analysts say investors reacted badly to the news that nigeria’s apex bank sanctioned some financial institutions by taking profit.
This, however, caused the decline in market indices. The cbn as reported in some quarters deducted a total of n499.17 billion from the accounts of 12 banks under its supervision, over their failure to meet the september 30, 2019 deadline it had stipulated for them to maintain ldr ratio. The banks include citibank, first bank of nigeria, fbnquest merchant, first city monument bank, guaranty trust bank, jaiz bank, keystone bank and rand merchant bank. Others are standard chartered bank, suntrust, united bank for africa and zenith bank.
Reacting to the development, president, chartered institute of bankers of nigeria (cibn), uche olowu, said that the amount represents 13.5 per cent minimum interest on the deposits, which is the cbn monetary policy rate (mpr) while adding that the regulator has also shown the banks that it can bite. “the sanction is an indication that when the cbn tells banks to do something, it must be taken seriously. I still believe that the cbn may release the funds to the banks when they meet the new 65 per cent ldr target. The good thing is that the funds still counts for the banks’ liquidity ratio,” olowu said. Former executive director, keystone bank, richard obire, said that getting the banks to lend more requires certain policy decisions on the part of the cbn, including crashing the treasury bills (t-bills) rates. According to him, “if the banks do not find the t-bills attractive investment plan, they will be forced to lend to the real sector.” Meanwhile analysts at cordros capital in their assessment of the performance of the market, noted that the bearish trend is likely to persist while adding that it expects investors to reap gains over the final months of the year.
“in our view, the trend witnessed through the year is likely to persist through the final quarter of the year, although we expect pockets of gains over the final months of the year as fund and portfolio managers realign portfolios prior to the start of 2020.
“nonetheless, we note that valuations remain attractive driven by price deterioration throughout the year. Hence, we advise that long-term investors consider appropriately timed investments,” they said.