Capital Markets
From The Report: Nigeria 2015
View in Online Reader
Following two years of rapid, double-digit gains in its equity market and strong foreign investor appetite in fixed income, Nigeria’s capital markets entered 2014 with the wind at their back, thanks in part to the announcement of a favourable reweighting of the MSCI Frontier Index in 2013. As the portfolio of investable instruments continues to grow with the launch of new platforms, Nigerian authorities are seeking to further deepen Africa’s third-largest financial markets. Indeed, new products, along with more liquidity, will be needed if the Nigerian Stock Exchange is to reach its goal of a $1trn capitalisation by 2016. The Nigeria stock market is poised for stronger growth throughout 2015. The peaceful conclusion to the March 2015 elections should help rebuild investor confidence, both in the stock market and the wider economy, although depressed oil prices continue to be a reason for caution. Ongoing structural reforms are set to foster better capitalised players that will drive the expansion of penetration locally and further attract global frontier market funds.
This chapter contains interviews with Oscar N Onyema, CEO, The Nigerian Stock Exchange (NSE), and Wale Agbeyangi, Managing Director, Cordros Capital.
Articles from this Chapter
Nigeria’s capital markets poised for expansion
Oscar N Onyema, CEO, The Nigerian Stock Exchange (NSE): InterviewOBGplus
Interview:Oscar N Onyema What are the greatest challenges in attracting new listings on the NSE? OSCAR N ONYEMA: There are a number of different challenges facing the various players in the sector. With privatised companies the biggest challenge is probably that these entities were so run down to start with and lacked appropriate financial statements that would qualify them as good companies to be listed. We also believe that the fortitude and willingness of the government to push hard for…
Encouraging corporate issuance on primary and alternative exchangesOBGplus
With issuance on the primary market remaining far below the levels seen during the heydays of the mid2000s, attracting new supply will be key if the Nigerian Stock Exchange (NSE) is to meet its goal of a $1trn market capitalisation by 2016 – up from N12.14trn ($74.05bn) in early April 2015. NSE management has mentioned some 500 firms in which it sees potential for listing, despite modest results in recent years. Equity raising has taken the form of secondary rights issues by already listed firms,…
Wale Agbeyangi, Managing Director, Cordros Capital: InterviewOBGplus
Interview: Wale Agbeyangi What challenges do the Securities & Exchange Commission’s recapitalisation deadlines pose? WALE AGBEYANGI: In the industry as a whole, due to a number of undercapitalised firms and because capital markets are still facing recovery challenges from 2009, many are finding this aspect difficult. Nevertheless, I am confident that a number of operators will meet the minimum capitalisation requirements before the deadlines. Investors remain weary, looking at the array of…
Over-the-counter trading and alternative exchanges offer opportunities for liquidity growth in NigeriaOBGplus
The last year has seen the launch of several new market platforms in Nigeria, ranging from an alternative board on the Nigerian Stock Exchange (NSE) dedicated to high-growth small and medium-sized enterprises (SMEs) to platforms for trading over-the-counter (OTC) equities and fixed-income securities. The new tools have seen varying levels of success, with the fixedincome OTC platform having garnered the most liquidity and interest by far. However, the diversification of trading platforms is not a…
Reforms in Nigeria’s capital markets boost prospects for investment in pension fundsOBGplus
While the assets of Nigeria’s main pool of domestic institutional investment – pension funds – have grown rapidly since reform was enacted in 2006, their investment mix has remained very conservative, clustered overwhelmingly in government securities with a so-called risk-free rate of return, which funds have bought to hold. Indeed, asset growth has been driven by the expansion in contributions rather than return on investment. Yet, as the profile shifts towards younger-aged contributors, pension…
IT solutionsOBGplus
The Company Computer Warehouse Group (CWG) was incorporated as a private limited liability company in 2005 and fully commenced operation in 2011 following its 2010 acquisitions of 100% stakes in CWL Systems, DCC Networks and ExpertEdge Software. The company is currently a leading IT solutions provider specialising in the supply, installation, integration, maintenance and support of computer equipment, e-payment hardware and ancillary equipment. The group became a public liability company in 2013 following a listing on the Nigerian Stock Exchange through a private placement exercise. Though incorporated in 2005, its operations in Nigeria’s ICT…
BankingOBGplus
The Company Guaranty Trust Bank, with its many businesses covering Anglophone West Africa and the UK, has grown into one of Nigeria’s most respected and service-focused banks. The bank, along with its subsidiaries, is organised into three business segments: retail, corporate and commercial. It currently has over 29.43bn shares outstanding, translating to a market capitalisation of more than N763bn ($4.7bn). Its asset base has grown to about N2trn ($12.2bn), with a shareholders fund of over N200bn ($1.2bn). In 2007, the bank became the first Nigerian financial institution to undertake a $350m “regulation S” eurobond issue and a $750m global…
BankingOBGplus
The Company Guaranty Trust Bank, with its many businesses covering Anglophone West Africa and the UK, has grown into one of Nigeria’s most respected and service-focused banks. The bank, along with its subsidiaries, is organised into three business segments: retail, corporate and commercial. It currently has over 29.43bn shares outstanding, translating to a market capitalisation of more than N763bn ($4.7bn). Its asset base has grown to about N2trn ($12.2bn), with a shareholders fund of over N200bn ($1.2bn). In 2007, the bank became the first Nigerian financial institution to undertake a $350m “regulation S” eurobond issue and a $750m global…
CementOBGplus
The Company Lafarge Africa is a 73%-owned subsidiary of France’s Lafarge SA and the result of a mid-2014 merger of Lafarge Wapco Cement (Wapco) with Lafarge South Africa Holdings, United Cement Company of Nigeria (Unicem), Ashaka Cement and Atlas Cement Company. The transaction, completed in September 2014, consolidated the parent company’s African assets, thereby raising the new entity’s market capitalisation to N521.9bn ($3.2bn) on the Nigerian Stock Exchange (NSE) and bringing its total cement manufacturing capacity to 12m tonnes per annum (tpa). The largest of these, Wapco, has its production base in Nigeria’s south-western…
Nestlé Nigeria: Food and beveragesOBGplus
The Company Nestlé Nigeria is a subsidiary of Nestlé Group, one of the world’s largest food and beverage companies, which established a presence in Nigeria in 1961 and was listed on the Nigerian Stock Exchange in 1978. The company is 63.75% owned by Ghanabased Nestlé Central & West Africa. Since entering Nigeria, Nestlé has grown to become one of the country’s leading brands in food and beverages. In the marketplace, its products include infant cereals (Nutrend, Cerelac, Nan), family cereals (Golden Morn), beverage drinks (Milo, Nescafé, Nido), confectionary ( Chocomilo), bouillon (Maggi) and table water (Pure Life). Financial…
Oil and gasOBGplus
The Company Oando was listed on the Nigerian Stock Exchange in February 1992 and in 2005 became the first African company to have a cross-border inward listing on the Johannesburg Stock Exchange. In 2012 its upstream business, Oando Energy Resources, became the first indigenously Nigerian firm to be listed on Canada’s Toronto Stock Exchange. The company’s business operations are organised into six divisions: in the upstream sector, exploration and production, and energy services; in the midstream sector, gas and power; and in the downstream sector, marketing, supply and trading, and terminals and logistics. By adding gas and power distribution,…
Transcorp Hotels: HospitalityOBGplus
The Company Transcorp Hotels, formerly Transnational Hotels and Tourism Services, is the hospitality subsidiary of Transnational Corporation of Nigeria (Transcorp), which holds a 79% stake in the company following the successful conclusion of an initial public offering (IPO) in October 2014 and subsequent listing on the Nigerian Stock Exchange, which reduced Transcorp’s stake from 88%. The rest is owned by the federal government of Nigeria (11%) and individual shareholders (10%). Transcorp Hotels currently owns two hotels. The first, Transcorp Hilton Abuja, is one of Nigeria’s leading hotels, with 670 rooms (427 standard, 116 deluxe…
