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Operators Raise Pension Fund Investment in Infrastructure to N1.82bn

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The Director General of the National Pension Commission (PenCom), Ms
  • Operators Raise Pension Fund Investment in Infrastructure to N1.82bn

The pressure by the government and other investors on the Pension Fund Administrators to invest the growing pension fund in infrastructure to cushion the effect of recession on the economy seems to be paying off as the operators have steadily increased the value of the fund in infrastructure bond.

In May 2015, the operators invested a sum of N568m in infrastructure for the first time; they increased it to N1.35bn at the end of December 2015.

By September 2016, they had invested N1.82bn in infrastructure bond out of the total assets that currently stand at N6.2tn.

The assets under the CPS have been recording a stable growth despite the recession.

Some operators, who spoke to our correspondent, said they were ready to increase the level of investment in infrastructure during the current recession in the economy if the portfolios made available to them could meet the specifications of the pension regulatory guidelines.

It was gathered that investors, who could not access the fund due to the stringent measures introduced in the investment guidelines by the National Pension Commission, had been seeking the Federal Government’s backing to get the pension operators to invest part of the funds in their projects.

According to the operators, the fund is safer for investments if fully backed by the Federal Government securities.

According to the operators, the fund is not lying idle but has been invested in different portfolios, which are the FGN bonds, treasury bills, domestic ordinary shares, local money market securities, corporate debt securities, real estate properties, state government securities, foreign domestic shares and cash/other assets.

The fund is also being invested in private equity fund, open/close-end fund and supra-national bonds.

The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarehide Longe, said the pension fund was making notable societal impact.

He noted that there had been calls by stakeholders in the public and private sectors that the fund should be used to address the infrastructural gap in the country.

He explained that the draft investment guidelines, which specify to the operators how to invest the fund, led to a cut in the requirements on how much pension fund might be invested in specialised instruments, such as infrastructure and private equity securities within the country.

Longe said that the pension fund was being optimally invested and professionally managed by the PFAs.

“The investment guidelines are broad and comprehensive enough to include assets that will make notable societal impact,” he said.

Longe explained that the PFAs could be more adventurous in the asset classes they reviewed, developed and invested in, adding that the CPS provided a positive opportunity over the long haul to improve the general wealth environment of the country.

The Head, Investment Supervision Department, National Pension Commission, Ehimeme Ohioma, said there was a huge infrastructure gap, cutting across critical areas of the economy, which had impacted on the level of the country’s economic growth/performance.

“The pension reforms and introduction of the CPS have significantly enhanced savings mobilisation, capital (equity and bond) market development, economic growth and macroeconomic performance,” he said.

According to him, infrastructure is a potential avenue for pension fund to reap higher and consistent returns on investment if adequate policies, structures and regulations are instituted.

He observed that several countries in Europe, Latin America and Africa had successfully utilised parts of their accumulated pension funds by investing them in new infrastructure projects or renewing dilapidated ones.

Globally, he said, productive investments in infrastructure were made possible by long-term private funds/savings and other sources like government revenues and bank loans.

“Pension fund investment in infrastructure is a reasonable proposition given the good asset/liability match, as infrastructure projects are long-term investments that match the long duration of pension liabilities,” Ohioma said.

According to him, Nigeria has a large infrastructure deficit in all key sectors largely due to population growth, demographic changes and urbanisation, which have driven increased demand for infrastructure.

He explained that the regulation on investment of pension fund assets issued by PenCom was amended to allow for investment in alternative asset classes such as infrastructure bonds.

PenCom, however, noted that the challenges of pension fund investment in infrastructure included availability of products and dearth of alternative asset products in the Nigerian financial markets.

The challenge also include liquidity risks, as pension funds prefer low or no risk products that are able to generate steady income from the onset.

The Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, stated that there was a need for the government to provide adequate guarantees to secure investment of the pension fund in infrastructure.

She said while the commission was not opposed to the idea of deploying the pension fund in infrastructure, adequate mechanism must be put in place to ensure its safety.

The PenCom boss explained that the pension fund alone would not be able to address the infrastructure needs of the country, adding that other sources of funding such as public-private partnership arrangements should be explored.

She said, “Today, pension and social security systems serve as catalysts for generating pool of long-term investible funds that can be used to develop necessary ingredients for economic development such as infrastructure.

“Given the current global economic challenges occasioned by the drop in commodity prices, the funds generated under viable pension schemes have become veritable sources of financial intermediation.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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MicroStrategy Rally Crushes Short Sellers, Wiping Out $1.92 Billion

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MicroStrategy- Investors King

Short sellers betting against MicroStrategy found themselves facing significant losses as the company’s rally wiped out $1.92 billion since March.

This development comes amidst a rally that has seen MicroStrategy’s stock outperform bitcoin, causing a considerable hit to those who had taken a bearish stance on the tech firm.

According to data from S3 Partners, short sellers have been on the losing end since March, as MicroStrategy’s stock surged, highlighting the impact of the rally on those betting against the company’s success.

This loss underscores the challenges faced by short sellers in a market where certain stocks experience rapid and unexpected price increases.

The rally in MicroStrategy’s stock is attributed to several factors, including the approval of several spot bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) earlier in the year.

This move by the SEC brought bitcoin, a once-nascent asset class, closer to the mainstream and fueled investor interest in companies like MicroStrategy, known for their significant holdings of the cryptocurrency.

MicroStrategy, which held nearly 190,000 bitcoin on its balance sheet as of the end of 2023, has indicated its intention to continue increasing its exposure to the digital currency.

The company’s decision to sell convertible debt to raise money for additional bitcoin purchases further bolstered investor confidence and contributed to the stock’s rally.

Analysts at BTIG noted that the premium for MicroStrategy’s stock reflects investors’ desire to gain exposure to bitcoin indirectly, especially those who may not have the means to invest directly in the cryptocurrency or ETFs.

The company’s ability to raise capital for bitcoin purchases is seen as a positive sign for shareholders, adding to the optimism surrounding its stock.

However, despite the recent rally and optimism surrounding MicroStrategy, the crypto industry as a whole continues to be heavily shorted.

Short interest in nine of the most-watched companies in the crypto space remains high, standing at 16.73% of the total number of outstanding shares, more than three times the average in the United States.

Moreover, concerns persist regarding the SEC’s stance on cryptocurrencies, with some experts suggesting that the approval of spot bitcoin ETFs may not necessarily indicate a broader acceptance of other similar products, such as spot ethereum ETFs.

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Geregu Power Plc Announces N14.46bn Profit in Q1 2024

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Geregu Power Plc

Geregu Power Plc has announced a profit of N14.46 billion for the first quarter (Q1) of 2024.

This represents a 307% increase when compared to the same period last year.

The power-generating company, known for its pivotal role in Nigeria’s energy sector, disclosed its outstanding financial results in its interim financial statement filed with the Nigerian Exchange Limited on Tuesday.

This disclosure comes shortly after the firm’s Deputy Chief Executive, Julius Omodayo-Owotuga, hinted at the promising financial outlook during the company’s recent annual general meeting held in Lagos.

According to the interim report, Geregu Power Plc’s revenue surged to N50.42 billion in the first quarter of 2024, representing an increase of 254.37% year-on-year appreciation.

The company’s net finance income transitioned from a negative position to N133.61 million. This positive momentum was supported by a moderation in finance costs, which decreased from N3.141 billion to N2.29 billion as of March 2024.

Speaking to stakeholders at the recent annual general meeting, Femi Otedola, Chairman of Geregu Power, expressed satisfaction with the company’s exceptional financial performance in 2023.

Otedola highlighted the board’s decision to propose a dividend distribution of N8 per share for the 2023 financial year as a testament to their commitment to rewarding shareholders and confidence in the company’s future prospects.

The robust financial results for the first quarter of 2024 further solidify Geregu Power’s position as a leading player in Nigeria’s energy landscape.

The company’s commitment to operational excellence, strategic investments, and adherence to international standards, such as obtaining ISO 9001 and 14001 certifications from the Standard Organisation of Nigeria, underscores its dedication to driving sustainable growth and value creation.

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Guaranty Trust Holding Company Plc Records N609.3bn Profit Before Tax in 2023

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GTCO Commemorates Listing on Nigerian Exchange - Investors King

Guaranty Trust Holding Company Plc (GTCO) has announced a strong profit before tax (PBT) of N609.3 billion for the 2023 financial year.

This represents an increase of 184.5 percent when compared to the previous year.

The audited consolidated and separate financial statements filed with the Nigerian Exchange Group and London Stock Exchange on Monday revealed market capitalization exceeded N1 trillion on the NGX to further solidify GTCO’s position as one of the top financial holding companies in Nigeria.

During the period under review, the group’s post-tax profit rose by 218.99 percent to N539.65 billion from N169.17 billion in 2022.

Key indicators such as loans and advances increased by 31.5 percent to N2.48 trillion, while deposits grew by 63.7 percent to N7.55 trillion.

The group’s total assets and shareholders’ funds closed at N9.7 trillion and N1.5 trillion, respectively.

Despite the challenging economic environment, GTCO maintained a strong capital adequacy ratio of 21.9 percent.

Also, the group sustained asset quality, with IFRS 9 Stage 3 loans improving to 4.2 percent in December 2023 from 5.2 percent in the same period of the prior year.

However, the cost of risk experienced an uptick, rising to 4.5 percent from 0.6 percent in December 2022, largely due to worsening macroeconomic factors.

Despite these challenges, GTCO’s pre-tax return on equity stood at 50.6 percent, while pre-tax return on assets was 7.6 percent. The cost-to-income ratio remained favorable at 29.1 percent.

Commenting on the financial results, Mr. Segun Agbaje, the Group Chief Executive Officer of GTCO, expressed satisfaction with the company’s performance amidst a challenging operating environment.

He attributed the strong performance to the successful implementation of the group’s business model across banking and non-banking business verticals.

“Also important to our success is our relentless obsession with innovation and offering great customer experiences as demonstrated by the successful redesign and upgrade of our mobile banking application, GTWorld,” he stated.

“In a landscape characterised by evolving regulatory reforms, global uncertainties, and heightened competition, we have continued to leverage our inherent strengths and capabilities to unlock significant value, creating more opportunities for the businesses and individuals we serve.

In line with its commitment to shareholders, GTCO announced a final dividend of N2.70k, bringing the total dividend for 2023 to N3.20k.

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