Capital Markets
From The Report: Nigeria 2013
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Strong growth in both equities and bonds in 2012, driven by foreign portfolio inflows that more than tripled from $5bn in 2011 to $17bn in 2012, according to the World Bank, cast off the long shadow of the 2008 financial downturn. With liquidity returning, authorities are planning to deepen and diversify the markets through reforms and the launch of new products. While Nigeria remains exposed to international investors’ risk-on, risk-off switches, a growing pool of domestic investors is returning to the equity market for the first time since 2008. With relatively new management enacting key structural reforms to deepen the markets, the private sector should find more alternatives to meet its growing need for capital.
This chapter contains an interview with Oscar Onyema, CEO, Nigerian Stock Exchange, and a viewpoint from Wale Agbeyangi, Managing Director, Cordros Capital.
Articles from this Chapter
New frontiers: Resurgent equity and higher levels of capitalisation are moving the market forward
Bond changes: Funds from two bond sales to finance infrastructure developmentOBGplus
The latest international bond sale from Nigeria, which was heavily oversubscribed, underscored the bullishness of overseas investors regarding the country’s sustained if uneven growth. However, the yield level on the offering also highlights the looming challenges that Nigeria, along with other emerging markets, could face when seeking to raise capital in the future as the US economy begins to pick up. On July 2, 2013 Nigeria closed the book on two blocks of dollar-denominated bonds worth…
OBG talks to Oscar Onyema, CEO, Nigerian Stock Exchange (NSE)OBGplus
Interview:Oscar Onyema In what way will the new corporate governance metrics and rankings influence investor behaviour? OSCAR ONYEMA: The Convention on Business Integrity is helping us to develop the metrics and rating system that we can then use in creating an index for quoted companies. We aim to have an index by the end of 2013 and a premium listing board by the beginning of 2014. One of the standards we will be looking at is whether a company belongs to the corporate governance index. The…
Wale Agbeyangi, Managing Director, Cordros Capital, on foreign investors in the wake of the financial crisisOBGplus
Frontier markets gained popularity amongst foreign investors before the global financial crisis of 2009. These countries’ economic prospects were improving and more so, the level of liquidity in the global economy encouraged investors to take risks. These markets were recognised as the next generation of emerging markets, less established than BRICS (Brazil, Russia, India, China and South Africa), but with a greater upside potential for investors. However, the risks of investing in these…
Moving the market: Increasing listings from new issuers is a top priorityOBGplus
One of the exchange’s more pressing needs is developing a new supply of listings from both primary and secondary issuers to add depth to a market that poorly represents the structure of the Nigerian economy. Market movers remain the banking, fast-moving consumer goods and building materials sectors, while dynamic sectors like telecoms, power, and upstream oil and gas remain largely absent from the bourse. The Nigerian Stock Exchange (NSE) has passed reforms aimed at increasing the market’s…
Local interest: Domestic investors are turning to the equity marketsOBGplus
While the market’s rally in 2012 was spurred by a tripling of foreign portfolio inflows to $17bn, domestic investors – dominated by institutionals – have increasingly returned to equity markets as well. Scarred by the 2008 downturn, high-net-worth individuals have turned to the money market; exposure to rapidly rising equities has grown significantly since 2012. Pools of institutional funds like banks and pension fund administrators (PFAs) still accounted for over 90% of money invested…
Institutional investors: New rules for pension fund administrators should increase domestic equity and debt activityOBGplus
The capital markets have seen a significant jump in liquidity over the past 24 months, driven in part by an increase in foreign portfolio inflows. However, domestic investors have played a growing role as the markets continue to rebound from the 2008 sell-off crisis (see analysis). This is in part a reflection of a return by retail investors, but it is the institutional investors – who already comprised 90% of the funds invested in 2012 – who may prove to be the biggest driving force in the…
Dangote Cement: IndustryOBGplus
THE COMPANY: Dangote Cement is a fully integrated cement company with projects and operations in Nigeria, Benin and Ghana. Cement was the initial focus of the Dangote Group’s trading operations in 1981. Since that time, the larger conglomerate has made strides to transition from a trader of cement to a manufacturer. Dangote Cement was incorporated in 1992 and has a total production and import capacity of 14m tonnes per annum. The company also has new production projects in development, which promise to add another 11.1m tonnes per annum. The company operates the Obajana cement plant, the largest cement plant in sub-Saharan Africa, which…
Fidson Healthcare: PharmaceuticalsOBGplus
THE COMPANY: Fidson Healthcare is a wholly indigenous pharmaceuticals company and a member of the Fidson Group. It is one of the leading pharmaceuticals firms in Nigeria and the West African sub-region. The company, which was formed in 1995, manufactures, markets and exports high-quality pharmaceuticals products in Nigeria. Fidson has its corporate head office in Lagos and a manufacturing plant in Ota. The company pursues best practices and ethical standards in all of its dealings, including complying with the Securities and Exchange Commission code of conduct and maintaining an amicable relationship with its shareholders. In 2005, it became…
National Salt Company of Nigeria: Consumer goodsOBGplus
THE COMPANY: The National Salt Company of Nigeria (NASCON), a subsidiary of Dangote Group, is involved in the refining and packaging of table salt, industrial salt and agricultural salts in Nigeria. NASCON was established in 1971 and, after many years of poor performance, the company began to recover following its acquisition by Dangote Industries (a member of the Dangote Group) in January 2007. The new owner improved the company’s productive assets, placing them in favourable and competitive locations, and increasing production capacity to 400,000 tonnes. This has allowed NASCON to take 60% of the market share of its products. The company…
Presco: AgricultureOBGplus
THE COMPANY: Presco is a fully integrated agro-industrial establishment with oil palm plantations, a palm oil mill, palm kernel crushing plant and vegetable oil refining plants. It specialises in the cultivation and extraction of oil palm, and the refining and fractionation of crude palm oil (CPO) into finished products. Presco has an integrated production process and this allows it to supply sphere fats and oils based on customers’ specifications. The company has commenced investments in the rubber sector, and has already established a bud wood garden and acquired approximately 14,000 ha of land for the rubber plantation. Presco was…
UACN Property Development Co.: Construction/real estateOBGplus
THE COMPANY: UACN Property Development Company (UPDC) stands as the leader in the high-end segment of the real estate market in Nigeria. UPDC’s main business and core activities are the acquisition, development, sales and management of high-quality serviced commercial and residential properties in the luxury, premium and classic segments of the real estate market in Nigeria. UPDC operated as a division of UAC of Nigeria until 1997 when it was incorporated as a public limited liability company and listed on the floor of the Nigerian Stock Exchange (NSE). The company is listed under the construction/real estate sector and the real estate…
Zenith Bank: BankingOBGplus
THE COMPANY: Zenith Bank is one of Nigeria’s largest banks by Tier 1 capital and shareholder funding, offering diverse operations in the financial sector. Beyond Nigeria, the bank also has subsidiaries and branches in The Gambia, Ghana, Sierra Leone, South Africa and the UK. In 2012 the bank was named the “Best Bank in Corporate Governance” by World Finance and one of the “20 Global Super Brands” by FTSE Global Markets. The bank currently has 31.4bn shares outstanding, translating to a market capitalisation of N664.67bn ($4.19bn). In 2013 Zenith Bank listed $850m worth of its shares on the London Stock Exchange (LSE) at a price…
