Connect with us

Finance

Market Rally Boosts Prospects of Equities Capital Raising

Published

on

Nigerian Exchange Limited - Investors King
  • Market Rally Boosts Prospects of Equities Capital Raising

The recent rebound in the Nigerian equities market has increased prospects of companies considering raising funds through public offering of shares to finance their expansion and other projects.

For more than three years that the market has performed negatively, companies moved away from raising funds through sale of shares to members of the investing public. The companies stayed away from equity capital raising due to fear of poor response from investors. Those who dared the equities market did so through rights issues, which, in most cases, recorded partial success. Most of the companies have been resorting to the domestic and international debt markets.

However, the rebound in the market that has led to a significant rally, making the market to record a year-to-date growth of 23.6 per cent as at Monday, has opened a window for companies to raise equity capital to boost their operations.

A top official of a leading issuing house in the market, who spoke to THISDAY, said some companies were already considering raising additional funds via equity capital.

“Because of the bear run that persisted in the market for a long time, some of the companies went for debt capital, which is very expensive compared to equity capital raising. However, the positive investor sentiments seen in the market in recent time is making some of them to consider issuing shares not only to existing shareholders but also to new ones,” the broker said.

According to him, if the bull-run continues for more months, some public offerings will be seen in the market soon.

Analysts at FSDH Research said recent developments show that confidence is returning to the Nigerian economy and the risks are waning.

The analysts explained that recent economic challenges and the high interest rate on debt securities in Nigeria had imposed limitations on companies’ ability to issue debt capital to fund expansion.

“As the economy is gradually exiting the current recession, there would be a need for companies to expand production capacities. Thus, the current rally in the equity capital market offers a great incentive for quoted companies to access the market to raise the needed equity capital for their expansion projects. As activities increase in the primary market segment of the equity market, the demand for debt capital may drop. Consequently, we expect the interest rate and yields on the fixed income securities to drop,” they said.

The analysts added that Nigeria recorded a favourable trade balance of N719.38billion in first quarter (Q1), 2017 from a trade deficit of N253.33 billion in Q1 of 2016.

According to them, the positive growth in the foreign trade statistics resulted in additional foreign exchange inflows for the country which bolstered the Central Bank of Nigeria (CBN)’s ability to support the current stability in the foreign exchange market.

“We expect foreign trade to remain favourable for Nigeria for the rest of 2017. This should support the value of the Naira and reduce the need to maintain high interest rate to defend the exchange rate,” they said.

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.

Continue Reading
Comments

Finance

Federal Government Clears $120m Debt to Gas Companies Amid Nigeria’s Power Crisis

Published

on

Gas-Pipeline

Amidst Nigeria’s persistent power crisis, the Federal Government has taken a pivotal step forward by clearing a significant portion of its debt to gas companies.

A sum of $120 million has been paid out of the country’s $1.3 billion indebtedness to gas suppliers, offering a glimmer of hope for improved energy stability across the nation.

The Minister of Power, Chief Adebayo Adelabu, underscored the critical role of gas in power generation and highlighted how the mounting debts had severely hampered gas supply to electricity-generating companies, exacerbating the country’s electricity shortfall.

Nigeria heavily relies on thermal power plants fueled by gas for over 70% of its electricity needs, making the timely settlement of gas debts paramount for enhancing power generation capacity and addressing the nation’s energy deficit.

Addressing delegates at the 7th Nigeria International Energy Summit in Abuja, the Director of the Decade of Gas Secretariat, Ed Ubong, expressed optimism about the government’s progress in offsetting its financial obligations to gas producers.

He emphasized the importance of aligning gas and power sectors to foster sustainable energy solutions.

As Nigeria grapples with the multifaceted challenges plaguing its energy landscape, the government’s commitment to settling outstanding gas debts marks a pivotal stride towards revitalizing the country’s power infrastructure and ensuring reliable electricity access for its citizens.

Continue Reading

Finance

Nigeria Insurance Corporation Reimburses Depositors of 179 Closed Microfinance and Four Mortgage Banks

Published

on

Retail banking

The Nigeria Insurance Corporation (NDIC) has announced the successful reimbursement of depositors affected by the closure of 179 microfinance banks and four mortgage banks across the country.

The reassuring news came during the 45th Kaduna International Trade Fair, where NDIC’s Managing Director, Dr. Bello Hassan, explained the corporation’s unwavering commitment to safeguarding depositors’ funds amidst financial uncertainties.

Dr. Hassan, represented by Hauwa Gambo, the NDIC’s Deputy Director of Communication, highlighted the corporation’s proactive measures in protecting the interests of depositors.

The introduction of the Single Customer View framework has expedited the process of reimbursing depositors of liquidated banks, ensuring swift and transparent transactions.

The corporation’s collaboration with the judiciary has yielded positive results, facilitating the speedy prosecution of failed insured banks and resolving long-standing cases of bank liquidations like Fortune and Triumph Banks.

This concerted effort has significantly enhanced the debt recovery rate, enabling NDIC to declare full liquidation dividends to uninsured depositors of over 20 deposit money banks.

Furthermore, NDIC has embraced digital remote payment strategies, streamlining electronic funds transfers to verified depositors’ alternate bank accounts.

The introduction of the ‘Deposit Tracer’ initiative in partnership with mobile operators aims to address apathy among depositors with small balances, providing accessible avenues for claiming funds trapped in closed banks.

The initiatives underscore NDIC’s proactive stance in safeguarding depositors’ interests and ensuring financial stability in Nigeria’s banking sector.

Continue Reading

Banking Sector

85.51 Million Nigerian Bank Customers Face Withdrawal Freeze Over NIN, BVN Deadline

Published

on

First Bank

As the March 1 deadline looms, an estimated 85.51 million Nigerian bank customers are facing the possibility of frozen accounts due to their failure to link their National Identification Numbers (NINs) and/or Bank Verification Numbers (BVNs) to their accounts.

Recent findings reveal the potential scale of the impending banking crisis.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) indicates that Nigeria had approximately 146 million active individual bank customers as of December 2022.

However, by January 26, 2024, only 60.49 million BVNs were recorded on the NIBSS portal, leaving a significant portion unlinked.

Meanwhile, about 104 million NINs had been issued by December 2023, highlighting the disparity between NIN issuance and BVN linkage.

The Central Bank of Nigeria (CBN) had earlier issued directives to banks, mandating them to restrict transactions on accounts lacking linked NINs and BVNs, with effect from March 1, 2024.

Any accounts found non-compliant risk being designated as ‘Post no Debit,’ rendering them unable to process further transactions.

Responding to the impending crisis, the Director-General of the National Identification Management Commission (NIMC), Abisoye Coker-Odusote, emphasized the need for the revalidation of Front-End Partners (FEPs) to ensure the integrity of the identity database.

She underscored the importance of NIN registration and urged collaboration with various stakeholders to expedite the process.

The Executive Vice Chairman/CEO of the Nigerian Communications Commission (NCC), Dr. Aminu Maida, reiterated the significance of linking NINs to SIM cards to enhance national security.

Telecom subscribers were urged to comply with the NIN-SIM linkage directive to avoid service disruptions.

Meanwhile, financial service providers like Opay have issued reminders of the impending restrictions, urging customers to comply with the linkage requirements.

Amidst concerns, some customers contemplate transferring funds to compliant accounts to avoid potential financial setbacks.

As the deadline approaches, stakeholders are intensifying efforts to mitigate the impact of the impending banking crisis on millions of Nigerians.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending