Archive for the 'Nigeria' Category
March 11th, 2010 by Tom Minney
The Aureos Africa Fund, which closed its fundraising in January with US$381 million, has completed a $10 mln investment in a leading Nigerian leasing company, C&I Leasing Plc. (www.c-ileasing.com). The fund is believed to be the largest fund ever to focus on investing in small to mid-sized businesses across Africa, and the latest investment brings its total investment in Nigeria to $40 mln.
Aureos Capital Ltd (www.aureos.com), a leading private equity fund management company specialising in investing in small to medium-sized businesses in emerging markets, manages the fund. Jacob Kholi, Managing Partner of Aureos in West Africa, comments in a press release: “Leasing is a fast-growing part of the financial services sector in Africa and we are delighted to have invested in a market-leading business that has ambitious expansion plans.”
C&I was established in 1990 and offers companies both operating and finance leases on various classes of assets. The company is active in other services such as car rental, car distribution and other logistics services. In 2007, C&I acquired a Ghanaian lease provider as part of its regional expansion strategy and is also exploring growth opportunities in the telecommunications, oil and gas, and fast-moving consumer goods (FMCG) sectors.
Davinder Sikand, Regional Managing Partner of Aureos in Africa, adds: “As with many other emerging markets, African economies have grown steadily throughout the global downturn. Nigeria is the second-largest economy in Africa after South Africa and with GDP increasing at over 5% per annum, Nigeria offers serious opportunities for private equity investment in SMEs with regional growth ambitions.”
“The success of Aureos in the region reflects its excellent deal sourcing capacity by having seasoned teams on the ground, and the ability to build a well diversified portfolio.”
Kholi says: “Whereas the Nigerian stock markets fell by more than 40% over the last two years, Aureos’ first generation fund’s portfolio in Nigeria grew by approximately 19% in value over that same period. We are excited to be forging strong relationships with small and mid-cap Nigerian businesses, and for Aureos Africa Fund to be able to capitalise on the strong track record we have built with our first generation Aureos West Africa Fund.”
“This new investment… is a demonstration of our commitment to West Africa, with the majority of our Nigerian companies having expanded their revenue base throughout the region.”
Aureos Capital is a private equity fund management company which specialises in providing expansion and buy-out capital to unlisted mid-cap businesses across Asia, Africa and Latin America. Since establishment in 2001, Aureos has increased its funds under management to over $1.2 billion and extended its geographical footprint to over 50 emerging markets, by establishing 16 regional private equity funds.
February 24th, 2010 by Tom Minney
Standard Chartered Private Equity Limited (www.standardchartered.com) recently announced $47.5million investment for a minority stake in Seven Energy (www.sevenenergy.com), a leading Nigerian gas exploration and development company, according to a report in Nigeria’s Vanguard newspaper.
Seven Energy was formed in 2007 and is focused on the provision of gas to leading industrial firms in Nigeria. Standard Chartered envisages that, in the medium term, the investment will Seven Energy’s existing management team in its drive as a pioneer and consolidator within Nigeria’s gas industry.
Christopher Knight, the Managing Director/ CEO of Standard Chartered Bank Nigeria Limited was reported as saying: “We are proud to invest in Seven Energy as Seven’s value proposition is uniquely hinged on the monetization of Nigeria’s substantial gas reserves to meet the country’s growing energy needs. Our established footprint in Asia, Africa, and the Middle East, along with our long history of supporting trade flows to and from these regions, places us in a unique position to provide vital funding to growing companies in growing economies.”
According to the report, Dr Yemi Osindero, Head of Standard Chartered Nigeria’s private equity business, says: “This will be an active year for us in Nigeria. We have long term equity capital available to assist good companies that want to accelerate growth. We also have a knowledgeable team to assist the management and shareholders of our investee companies to achieve their objectives.” Dr. Osindero will join the board of Seven Energy.
Marlon Chigwende, Head of Standard Chartered’s African Private Equity business, says: “We will continue to invest equity capital in strong businesses and management teams across the African continent. After a year of turmoil in the international debt markets, we see a clear need for committed equity to support growth.”
Standard Chartered Plc, headquartered in London and listed on both London and Hong Kong stock exchanges, ranks among the top 25 companies in the FTSE-100 by market capitalization. It has operated for over 150 years in some of the world’s most dynamic markets, leading the way in Asia, Africa and the Middle East. Its income and profits have more than doubled over the last five years, primarily as a result of organic growth.
December 17th, 2009 by Tom Minney
Another step has been taken towards the appointment of the new Director-General for Nigeria’s Securities and Exchange Commission. The Senate last week confirmed the appointment of Ms. Arunma Oteh, currently Vice President Corporate Management at the African Development Bank (AfDB – www.afdb.org) and focusing on the bank’s institutional development.
She has also been AfDB Treasurer (2001-6) and took overall responsibility for the Bank’s fund raising and investments in major international capital markets. Her previous job was Division Manager Investments and Trading Room (1997-2001) and Senior Investment Officer/Senior Capital Markets Officer (1993-7). She comes from Abia State.
The Senate Committee on Capital Market screened the recommendations of President Yar’Adua. The acting DG is Ms Daisy Ekineh.
Ms Oteh is reportedly of Nigerian/British nationality. Before joining AfDB in 1992, she worked in corporate finance, consulting, teaching and research for institutions such as Harvard Institute for International Development of USA and Centre Point Investments Ltd (Nigeria). Her qualifications include a Masters’ Degree in Business Administration from Harvard Business School and a 1st class BSc honours degree in Computer Science, from the University of Nigeria Nsukka. She has received a Harvard Fellowship Award and a National Merit Award.
She is on the Board of organizations including the Advisory Board of African investor and charity the International Financing Facility of Immunisation (IFFIM) set up by governments to fast-track immunization for achieving the Millennium Development Goals (MDGs).
It is not clear when she takes over the hot seat. Nigeria’s SEC is busy with investigations into capital market fraud and insider dealings as part of a grand clean up of the Nigerian financial sector. it does not have a website.
November 12th, 2009 by Tom Minney
The Nigerian Stock Exchange (NSE – www.nigerianstockexchange.com) on 9 November announced that it is seeking some N5 billion (US$33 million) in capital for its fifth software upgrade and also to help finance the Sierra Leone stock exchange.
NSE Director General Ndi Okereke-Onyiuke reportedly told local media that the exchange’s software has been upgraded four times, with the next in 2010, at a likely cost of 16 mln-20 mln euros ($24 mln-$30 mln). She added that the London Stock Exchange had reportedly spent 30 mln euro on its software, and talks continue on how the LSE could help in Nigeria.
Apparently donors gave grants to Ghana, Kenya, Tanzania and Uganda to upgrade their stockmarkets, but believe that Nigeria is too rich to need this.
The Sierra Leone stock exchange was launched by Sierra Leone President Dr. Ernest Bai Koroma on 17 July 2009, after being inaugurated in 2007. According to Nigerian media, the NSE launched the Sierra Leone exchange free of charge and now seeks financing for electronic trading there. The Sierra Leone exchange is under the wing of the central Bank of Sierra Leone (www.bankofsierraleone-centralbank.org). Okereke-Onyiuke said the NSE assisted Ghana previously and plans to help Liberia open a stock market.
According to other reports, the NSE earlier this year cut its holdings in the Central Securities Clearing System Ltd (www.cscsnigerialtd.com) from 100% to 30%, after a private placement of the shares.
The CSCS is the clearing house and central securities depository of the Nigerian stock market. It includes an integrated central securities depository (CSD) offering clearing (electronic book-entry transfer of shares from seller to buyer) and settlement (payment from buyer to seller) for all NSE transactions. All securities listed for trading on the NSE must have their certificates deposited in CSCS before transactions can take place. The CSCS was incorporated in July 1992 and started operating in April 1997.
She is reported to have told the House of Representatives Committee on Capital Markets: “We had to do this because our shareholders wanted to have better stake in the company, and again it gives room for proper corporate governance and a sense of belonging to all our stakeholders.”
November 1st, 2009 by Tom Minney
From 9 November, Nigeria’s Securities and Exchange Commission is to call stockbrokers and other market participants before its Administrative Proceedings Committee (APC). This is part of joint investigations into the financial sector, which have already led to the firing of chief executives and top management of 8 banks for recklessness and lack of governance, and a Naira 620 billion (US$4.1 bln) bailout programme.
The SEC is to “invite some capital market operators to its APC hearing, to explain their roles in unwholesome practices in the market”, according to SEC’s Head of Media, Lanre Oloyi. “At the end of the hearing, the Commission would impose appropriate sanctions on erring operators found to have engaged in acts that have brought disrepute and erosion of investors’ confidence to the capital market.”
The hearings follow a report submitted by SEC investigators into transactions including those of the bailed out banks. The SEC, the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) formed a joint investigating team.
Troubled banks include Oceanic Bank International, Afribank Nigeria, Union Bank of Nigeria, Finbank and Intercontinental Bank, bailed out with N420 billion, after their executive management teams were sacked on 14 August. The non-performing loans book has been found to be more than the initial N747 billion. Chief executives were also replaced on 2 October at Bank PHB, Spring Bank and Equatorial Trust Bank and they received a N200 billion injection. Unity Bank and Wema Bank were ordered to recapitalize by June 2010.
The CBN released the list of debtors. These included capital market operators, many accused of using borrowed funds to manipulate share prices on behalf of the various banks, including borrowing to buy up the banks’ shares, ensuring steady price appreciation. Peter Ololo, chief executive of Falcon Securities Ltd is alleged to owe the five banks about N88 bln and Bank PHB N201.266 bln. Banks also used their capital market subsidiaries to borrow money, include Platinum Capital (owing N11 bln), PHB Assets Management (N6.5 bln), Wema Securities & Finance (N6.1 bln) and Wema Assets Management, (N8.1 bln).
The equity price crash since March 2008 has led to huge non-performing loans. The arbitrary pricing of equities that resulted from the manipulation disturbed investors and wrecked confidence, compounding Nigeria’s crash.
Based on reports by This Day, Daily Independent and Daily Champion newspapers.
October 16th, 2009 by Tom Minney
The International Finance Corporation (www.ifc.org), a member of the World Bank Group, is investing $100 million into bringing the benefits of better telecommunications to many Nigerians via Helios Towers Nigeria Ltd. (www.heliostowers.com). HTN builds and maintains a network of telecommunications towers and leases space to providers of wireless telecommunications services.
According to an announcement on 13 October, the IFC is leading a $250 mln capital injection that will help Helios Towers increase its network to 2,000 sites nationwide. On 21 August, the IFC disbursed $50 mln in mezzanine financing and on 30 September 30 signed an agreement to lend another $50 mln in senior debt. IFC is arranging a further $150 million in senior debt from other commercial and development finance institutions. The towers and better coverage will help wireless operators roll out services more economically and extend affordable mobile services to the edges of towns and countryside.
The principals of Helios Investment Partners (www.heliosinvestment.com) founded HTN in 2005 to capitalize on very strong growth in mobile telephony in Nigeria by deploying the successful tower leasing business model pioneered by US-based companies such as Crown Castle International and American Tower. The business is characterized by high operating leverage, recurring revenues underpinned by long-term contracts, and high returns on invested capital.
Helios says in sub-Saharan Africa, the model exhibits the high growth characteristics of wireless communications and the defensive characteristics of a real estate business. According to the website, Helios and affiliated entities invested approximately $12 million and hold a majority interest in the company on a fully-diluted basis. Nigeria’s telecommunications sector has developed significantly, but 43% teledensity shows there is still room for growth. As HTN develops its network, operators outsource non-core activities and infrastructure and focus on developing products and services.
Kayode Akinola, HTN Director and Investment Principal at Helios Investment Partners says: “IFC’s long-term investment enabled us to leverage additional funding from capital markets, which is often not readily accessible for frontier markets,” said. “Nigeria remains one of the most high-growth telecom markets worldwide and wireless infrastructure sharing will continue to play a critical role in supporting operators in efficiently providing services to customers.” Helios aggregates more than $575 mln in capital commitments and also manages the $110 mln Modern Africa Fund.
Mohsen Khalil, IFC Director for Global Information and Communication Technologies, says: “Affordable mobile telecommunications enable access to knowledge and services, innovation across sectors, and more efficient delivery of government and business services, all of which will contribute to economic growth and opportunity creation.”
IFC supports sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. New investments totaled $14.5 bln in fiscal 2009, helping address the financial crisis.
October 14th, 2009 by Tom Minney
Free information on African listed companies? There are three excellent sites which offer fine material and services on promoting investor relations, and feature an enticing line-up of online published annual reports of listed companies from all over Africa as well as many other useful tips and advice. The sites are www.africaniscool.com, www.africanshareholder.com and www.africanfinancials.com. Congrats to Rob Stangroom on a great initiative.
Here are some good words of advice to African stock exchanges, from the www.africaniscool.com blog. I hope Investor Relations and shareholder activism will feature strongly on the agenda at the upcoming African Stock Exchanges Association Conference (www.aseaabuja2009.com) on 2-4 December 2009 in Abuja, Nigeria.
10 Investor Relations Tips for African Stock Exchanges (from www.africaniscool.com) on 2 Oct 2009.
TIP 1:
Make it mandatory that annual reports be published online as soon as they are made available or posted to shareholders. Less than 30% of African annual reports are currently online!
TIP 2:
Require an IR contact to be clearly indicated on the company website or stock exchange website and require a maximum turn around time. Investors should have access to companies that they own. They usually don’t!
TIP 3:
Automate the publication of corporate actions online with free access to attachments. The JSE has been offering the SENS platform to African stock exchanges for years – why not use it? Investors need information to make educated investment decisions.
TIP 4:
Incorporate the core investor relations best practices into the listing rules. And name the companies that are not compliant. Why? It makes sense, and it creates value.
TIP 5:
De-list companies that should not be listed, i.e. those with very low free floats and low number of shareholders. They are not serving any purpose except adding to the apathy of other listed companies.
TIP 6:
Do not seek rents from investment data of listed companies. Africa can’t afford it. Monetising these data should happen later, after the value has been created.
TIP 7:
Host a mandatory annual investor presentation event and ensure that all companies participate. Make sure to follow up and disseminate the presentations online. Why? To increase awareness in directors that they have a duty to ensure information is available.
TIP 8:
Standardise minimum requirements for the investor relations sections of websites, and name those not complying. Why? To create awareness.
TIP 9:
Pay for an IR specialist to present to listed companies at least every 6 months to increase awareness.
TIP 10:
Have an active public investor education programme, co-funded by government. Typically governments have created the masses of shareholders by privatising former state-owned companies through the stock exchange. Therefore it should be a joint responsibility into ensuring these investors become meaningful participants
October 6th, 2009 by Tom Minney
Bond issues are cropping up across Africa, and investor interest could be keen for selected issues, as seen by the US$1.5 billion orderbook for the African Development Bank global bond. New bonds include Kenya’s Kengen issue for more power generation which closed on 29 September, and bank issues in Nigeria and Uganda.
The Preferential Trade Area Bank, according to its website www.ptabank.org, has issued a Uganda Shs 40 billion bond (US$21 million) to be listed on the Uganda Securities Exchange (www.use.or.ug), after approval from the exchange and the Capital Markets Authority. The offer was to close on 2 October. The Bank will use the proceeds to finance project activities in Uganda requiring local currency.
Stanbic Bank is arranger and lead placing agent and African Alliance Uganda Limited is sponsoring broker and co-placing agent. The duration is medium term and the bond offers both a fixed and floating rate.
The PTA Bank is rated long-term BB- and short-term B by Fitch, while Global Credit Rating gave it A1 local currency short-term, AA local currency long-term and a BB long term rating.
The Bank has also issued bonds worth $25 mln in Kenya, listed on the Nairobi Stock Exchange. in 1999 The PTA Bank issued a 5-year UgShs15 bln local currency bond which was fully redeemed on its maturity in 2004. Bank President, Dr. Michael Gondwe, says: “We believe in deepening the stock markets of the countries that we operate in through issuance of such instruments.”
The Bank has financed $116 mln in trade and project activities in Uganda. In particular it has supported Uganda’s coffee and cotton exports, first through its Structured Pre-Shipment Financing Facility and later by directly financing exporters. Its authorized capital is $2 bln and subscribed capital is $1.18 bln, according to the bank’s website. Net interest income rose to $15.2 bln last year, up 20% on the previous year. Profits were $12.5 mln at the end of 2008, up 87% on the previous year’s $6.6 mln.
Nigeria’s United Bank for Africa Plc (http://www.ubaghana.com) aims to issue raise N500 billion ($3.4 bln) in tranches through a combination of bonds with a 7-year duration and ordinary shares, according to its website. The bank was scheduled to hold an Extraordinary General Meeting of shareholders in Abuja on 2 October for their endorsement and had previously notified the Nigerian Stock Exchange.
Group Chief Finance Officer, Mr. Victor Osadolor, says proceeds will go into opportunistic acquisitions, funding infrastructure and the consolidation of the bank’s channel and IT infrastructure. The bank says it has over 7 mln customers across 750 branches in 19 African countries, as well as presence in New York, London and Paris.
September 16th, 2009 by Tom Minney
Regulators and players in the Nigerian capital markets hope recent actions against five banks will restore confidence in the market, but it looks as if the storm is not yet over. The Securities and Exchange Commission (SEC) has indicated that investigations continue into securities trading firms, after the Central Bank of Nigeria (CBN) sacked the chief executives and executive directors of five banks and briefly suspended trading in their shares in a bid to avoid a banking crisis.
As the CBN Governor Sanusi Lamido Sanusi and five appointed replacement bank directors visited the Nigerian Stock Exchange (NSE) on 16 September, the overall index stood at around 21,090 and market capitalization was N4,843 billion (US$31.5 billion), down 18.5% from 25,865 (index) and N5,887 billion (market capitalization) at the start of August. Market capitalization was reportedly N12 trillion ($78 billion) last year. Liquidity was also down as the banking sector is a key part of market activity.
According to the Daily Trust newspaper, acting SEC Director General Daisy Ekineh told journalists last weekend that current reforms in the banking sector will help strengthen confidence in the market:: “I am confident that the market will recover ultimately. What the market actually wants is confidence and once this is assured it will ultimately return back. What is happening in the banks will ultimately strengthen confidence in the market.”
On 9 September, Farida Waziri, chair of the Economic and Financial Crimes Commission (EFCC), represented by Bala Sanga, her principal staff assistant, was reported by This Day newspaper to have said in a presentation – titled “Barbarians within the Gates: The EFCC, Criminal Loans And Tax Evasion” – that the crash in share prices on the NSE was not linked to the global financial meltdown but by the high level of insider trading and other malpractices perpetrated by some stockbrokers, a few boardroom criminals and other collaborators.
The clean up was a joint effort of an investigating team comprising the SEC, the EFCC, the CBN and Nigeria Deposit Insurance Corporation (NDIC). Ekineh was reported to say the SEC had been instrumental in probing capital market transactions linked to the investigations are were still busy with on-site target inspection of registered market entities in different parts of the country “to ascertain the state of health of firms operating in the capital market”, following up returns that firms normally submit to the Commission.
On 14 August the CBN fired the management and later suspended trading in the shares of Union Bank, Intercontinental Bank, Finbank, Afribank, and Oceanic Bank. Ndi Okereke-Onyiuke, NSE Director General, said the suspension was to protect investors and prevent an unprecedented dumping of the shares of the five banks. The suspension was lifted on September 2, 2009 but led to more sellers than buyers of the banks’ shares. The CBN also injected a massive N420 bn into the banks, although the Vanguard newspaper reported that only N100 bn was used.
The SEC also investigated Okereke-Onyiuke, according to news reports, but cleared her. SEC’s Ekineh is reported as stating: “All the issues we raised have been addressed by her and we are satisfied by her response.. and she responded in good time.”
However, Ekineh warned that recovery in confidence and share prices may take some time.
August 22nd, 2009 by Tom Minney
The Johannesburg Stock Exchange reports that it is satisfied with progress on its Africa Board, which aims to attract leading African companies to dual list their securities. The team has three more countries in its first year programme, building links with leading issuers, regulators, brokers and African exchanges.
The Board was launched on 19 February 2009 with its first listing, Trustco Group Holdings, a Namibian microfinance and insurance company also listed on the Namibian Stock Exchange.
In a recent email, the Africa Board management told www.africancapitalmarketsnews.com that the aim of the first year was to continue consultations with key market players. Since February, the team has visited Zimbabwe, Zambia, Kenya, Tanzania and Ivory Coast. On the future itinerary are Ghana, Nigeria and Angola. The team are establishing relationships with stock exchanges, regulators, stockbrokers and targeted issuers.
The team says their aim is “to establish how the Africa Board can work for the benefit of all parties involved”. According to the email: “In the next six months these trips will continue, with much the same agenda, and we are hopeful that in the course of next year, there will be further listings on the Africa Board.”