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Investors Unwilling to Buy Stake in Power Assets – Discos

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  • Investors Unwilling to Buy Stake in Power Assets – Discos

Nearly five years after the nation’s power sector was privatised, core investors in the electricity distribution companies say they have been unable to recoup their investment in the acquired assets.

The Discos said it was not true that new investors were waiting to buy stakes in the power distribution assets, describing calls for the core investors in the power firms to invest more as irrational.

The Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the Discos, Mr Azu Obiaya, told our correspondent in an interview that most of the core investors would be happy to sell off the assets they acquired in November 2013.

He said, “You may recall that at an investors’ press briefing, the chairman of Aura Energy, the investors in Jos Disco, indicated that he was prepared to sell Jos Disco at a discount, given the current environment.

“And I think that you can essentially project that sentiment for all of the Disco investors; that indeed the environment that would have made their investment worthwhile is not there. So, to the extent that it is not there, most of the Disco investors would happily sell the assets to any interested parties to get back their money.

According to him, as of today, the investors are not sure of the recovery of their investment, not to talk about returns on their investment.

Obiaya said, “If you are an investor, you are certainly not going to put in additional money if indeed you are in the negative. No rational investor operates like that; the ability to get your investment back as well as the return is why you are an investor. So, it is irrational for people to keep asking why the Disco investors are not putting in more money, when they cannot even recover the $1.4bn that they already put into the acquisition.

“Just as the banks are not prepared to lend money to the Discos for their capital investment, it is also illogical for any future investor to look at buying equity in the Discos that have negative equity. You cannot buy a share that is negatively determined. In other words, why would you want to go and buy a share that is not worth the money that you are paying for it? It doesn’t make sense.”

According to him, before investors buy, they want to be able to see the cash flow projection and the profit potential of the assets that they are purchasing.

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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Investment

Saudi Arabia Aims for $80 Billion Tourism Investment to Fuel Vision 2030 Goals

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Saudi Arabia is embarking on a bold venture to attract up to $80 billion in private investment into its burgeoning tourism industry, a move pivotal to realizing its ambitious Vision 2030 objectives.

Tourism Minister Ahmed Al Khateeb unveiled the kingdom’s aspiration during an interview in Riyadh, emphasizing the imperative role of the private sector in spearheading investment endeavors.

With plans to disburse approximately $800 billion on tourism over the next decade, Saudi Arabia is steadfast in its pursuit to diversify its economy and reduce dependency on oil revenues.

Vision 2030 outlines a trajectory for the kingdom to metamorphose into one of the world’s premier tourist destinations, targeting 150 million annual visitors by 2030, a significant portion originating from overseas.

While the government and sovereign wealth fund have historically fueled tourism development, securing substantial foreign direct investment, particularly from the private sector, emerges as paramount in expediting Vision 2030 initiatives.

The kingdom’s fiscal projections, forecasting deficits until 2026, underscore the urgency of engaging private investors to actualize the ambitious tourism blueprint.

Saudi Arabia, having welcomed 100 million tourists in 2023, predominantly domestic travelers, eyes international markets such as India, China, the UK, France, and Germany for tourist influx.

A new program launched by the Ministry of Tourism aims to streamline investment processes, potentially unlocking $11 billion in private investment, bolstering Saudi Arabia’s tourism trajectory and reshaping its economic landscape.

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CBN Unveils Plan to Settle N1.64 Trillion Treasury Bills in Q2 2024

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The Central Bank of Nigeria (CBN) has announced its strategic approach to managing liquidity and meeting financial obligations by unveiling a comprehensive plan to settle Treasury Bills (TBs) worth N1.64 trillion during the second quarter of 2024.

This initiative, part of the CBN’s Nigeria Treasury Bills Issue programme, aims to regulate the money supply within the economy while effectively managing liquidity dynamics.

According to documents obtained by Investors King, the TBs settlement program is slated to commence on March 7th and conclude on May 23rd, 2024.

The CBN will focus on settling TBs with varying tenors, including N414.29 billion on 91 days, N43.74 billion on 182 days, and a substantial N1.18 trillion on 364 days.

The breakdown of the settlement plan reveals monthly settlements to address maturing TBs. In March, the CBN plans to settle N660.62 billion worth of TBs, followed by N292.17 billion in April and N688.3 billion in May.

Market analysts interpret this move as a testament to the CBN’s commitment to managing financial obligations and maintaining economic stability.

It provides investors with opportunities to engage in short-term financial instruments while contributing to overall liquidity dynamics.

The strategic settlement plan reflects the CBN’s proactive stance in navigating economic challenges and ensuring stability within the financial landscape.

As the apex bank implements these measures, stakeholders will closely monitor their impact on market dynamics and economic indicators, anticipating implications for investment decisions and monetary policy outlooks.

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China’s State-Owned Lenders Allocate $8 Billion to Revitalize Property Market

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China’s state-owned lenders have committed a substantial $8 billion in loans to rejuvenate the country’s beleaguered property market, aligning with Beijing’s directives to bolster the sector.

Agricultural Bank of China Ltd. disclosed approving over 40 billion yuan of loans for real estate projects on predefined white lists, signaling a proactive approach towards supporting the housing market’s recovery.

China Construction Bank Corp. also joined the effort, extending 3 billion yuan to five property projects, with plans to greenlight over 20 billion yuan in loans soon.

Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. are among the institutions offering financing assistance, although the exact loan amounts remain undisclosed.

This initiative follows Beijing’s recent call for local authorities to enhance financing support for developers and curate lists of eligible projects.

In response, the big four state lenders pledged to meet reasonable financing demands from developers and projects identified under the coordination mechanism.

However, China’s property market faces challenges despite these measures. New home sales plummeted 34.2% year-on-year, underscoring the ongoing slowdown.

While existing home transactions surged during the Spring Festival holiday, new home sales remained subdued, prompting a cautious outlook among buyers.

The infusion of $8 billion aims to instill confidence and stimulate activity in the property sector, potentially heralding a gradual recovery amid persisting market uncertainties.

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