- Private Equity Fund Supports Nigerian Cash Solution Provider
A private equity fund manager, Apis Partners, has said that it would back cash management solutions provider, Bankers Warehouse Plc, with an undisclosed amount.
The emerging market-focused fund manager, which disclosed this, said the investment would be used to boost the company’s existing cash processing and cash-in-transit services, strengthen its capital structure, offer additional cash management solutions and grow its coverage.
Lagos-based Bankers Warehouse is the only local company with a license to process cash and one of five licensed to convey bank notes in armoured trucks from one point to another for its clients, which range from financial institutions to corporates and the Central bank of Nigeria (CBN), as deduced from its website.
Co-founder and Managing Partner at Apis Mr. Matteo Stefanel said: “We see a significant opportunity to further leverage technology within cash logistics to increase convertibility of digital and physical cash thereby augmenting user confidence and inclusion within the digital financial system.”
He however declined to state the amount being invested.
Apis’ backing of Bankers Warehouse is the second such private equity deal in the Nigerian financial services sector in the past month, after Bob Diamond’s Atlas Mara raised $200 million to boost holdings in Union Bank of Nigeria Plc, aimed at helping the latter expand its markets, treasury and financial technology businesses, according to an official statement released at the time.
The investment in Bankers Warehouse demonstrates Apis’ commitment to reducing the cost of financial intermediation in its target markets, according to Rotimi Oyekanmi, a partner at Apis, which is present in five countries and has completed five investments to date.
Oyekanmi added: “The company plays a critical role in Nigeria’s financial infrastructure and financial intermediation through its core cash management solutions and we look forward to supporting Bankers Warehouse as it improves the functioning of the country’s financial system by ensuring the integrity and availability of cash, as well as its efficient processing and digitisation.”
On the part of Bankers Warehouse the Vice chairman, Victor Hammond said: “The last 18 months securing bank credit for us was tough, we could not even raise foreign exchange to procure spare parts for our trucks, we had to cancel our contracts with about two banks.”
Oil Prices Recover Slightly Amidst Demand Concerns in U.S. and China
Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts
Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.
Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.
Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.
Despite this effort to tighten supply, market sentiment remains unresponsive.
“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.
Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.
Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.
Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.
Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.
The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.
Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.
Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.
U.S. Crude Production Hits Another Record, Posing Challenges for OPEC
U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.
The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.
The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.
Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.
This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.
While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.
The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.
Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.
Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.
This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.
In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.
However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.
Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.
While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.
The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.
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