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Capital Market

Oxford Business Group and African Securities Exchanges Association to team up for new Covid-19 Response Report



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A landmark Covid-19 Response Report (CRR), produced by Oxford Business Group (OBG) in partnership with the African Securities Exchanges Association (ASEA), will explore the impact of the pandemic on efforts to attract inflows to the region’s capital markets and the investment opportunities emerging ahead of the global economic recovery.

Titled “Financial Markets in Africa“, the CRR will provide in-depth analysis of the industry’s performance during the pandemic and potential for growth in an easy-to-navigate and accessible format, focusing on key data and infographics relating to the region’s socio-economic landscape.

Marking OBG’s latest Pan-African CRR, the report will examine the contribution that Africa’s exchanges are expected to make towards the region’s economic development in the near term.

Other topics set for analysis include the collective push under way across the continent to strengthen financial integration, which is seen as key to boosting investor interest in the region’s capital markets.

The report will include an in-depth interview with Edoh Kossi Amenounve, ASEA President, together with case studies looking at how key industry players-maintained business continuity during the pandemic and are now preparing for post-Covid expansion.

“Although the Covid-19 pandemic crisis will continue in 2021, the vaccination rollout is giving new confidence to African capital markets, and we expect to have a significant better year than 2020 in terms of transaction values,” Amenounve said.

Commenting ahead of the signing of a Memorandum of Understanding for the report, Karine Loehman, OBG’s Managing Director for Africa, said Africa’s capital markets were poised to play a pivotal role in attracting investment for the next phase of the region’s social and economic development, which is expected to focus on making future economic growth both sustainable and more inclusive.

“While the pandemic has inevitably taken its toll on the region, Africa had already carved a niche as a popular investment destination before Covid-19 arrived and is today home to some of the world’s fastest-growing economies,” she said. “Our report with the African Securities Exchanges Association will look at the many opportunities awaiting investors who are keen to help drive the region’s transformation and, at the same time, unlock the potential of Africa’s capital markets.”

The CRR will form part of a series of tailored reports which OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including a range of country-specific Covid-19 Economic Impact Assessment articles and interviews.

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CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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Capital Market

Ecobank to Raise US$300 Million Through Fixed Rate Reset Tier 2 Sustainability Notes



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Ecobank Transnational Incorporated (“ETI”), the parent company of Ecobank Group, has announced plans to raise US$300 million from the international debt capital markets through the issuance of Tier 2 qualifying sustainability Notes pursuant to the United States Securities and Exchange Commission Rule 144A and Regulation S (the “Notes”).

The leading financial institution listed on the Nigerian Exchange Limited, the Ghana Stock Exchange and the Bourse Régionale des Valeurs Mobilières (the “Stock Exchanges”) planned to use the next proceeds of the not to finance or refinance new or existing eligible assets in line with ETI’s Sustainable Finance Framework.

The bank disclosed this in a statement signed by Adenike Laoye, Group Head, Corporate Communications/ Chief of Staff to the Group Chief Executive Officer.

The statement read in part, “An equivalent amount of the net proceeds of the Notes will be used to finance or re-finance, in part or in full, new or existing eligible assets in accordance with ETI’s Sustainable Finance Framework.

“In view of the foregoing, ETI is pleased to notify the Stock Exchanges of the proposed launch of the Notes. ETI intends to list the Notes on the London Stock Exchange, with the expectation that the Notes will be traded on its regulated market.

“It should be noted that the issuance of the Notes (the “Transaction”) is subject to prevailing market conditions and the conclusion of the necessary Transaction documentation.”

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Capital Market

SEC To Collaborate With Ministry of Mines and Steel Development



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The Securities and Exchange Commission is seeking to collaborate with the Ministry of Mines and Steel Development to address some of the challenges faced by the solid minerals sector through the Commodities Exchanges.

This was stated by Director General of the SEC, Mr. Lamido Yuguda during a meeting with the Minister of State for Solid Mineral, Dr. Uchechukwu Ogah, in Abuja weekend.

Yuguda disclosed that the core function of a Commodity Exchange is to create markets by providing a setting where multiple buyers and sellers can trade commodity-linked contracts thereby reducing the costs associated with finding a buyer or seller to whom to transact. Other benefits of a Commodity Exchange include, improved quality, standardization, traceability (tracking the source of every solid mineral), price discovery, price risk management, accepted dispute resolution procedures and facilitating provision of commodity financing.

He said in the last couple of years however, Nigeria has been confronted by significant threats which include, structural fiscal challenges underlined by heavy reliance on crude oil for revenue, youth unemployment and increasing insecurity. This worrisome situation he said, has been exacerbated by the Covid-19 pandemic.

According to the SEC Boss, “In a bid to address these challenges, the Federal Government is aggressively growing its agricultural and solid minerals sectors as a catalyst for economic growth and diversification. To complement government efforts and deepen the capital market, the Commission set up a market-wide technical committee to undertake a holistic assessment of the existing framework of the Nigeria Commodity Ecosystem.

“The Committee grouped its recommendations in phases: In the first phase, the objective is to ensure food sufficiency and security, price discovery and market development while in the second phase, the focus would include developing strong trades in export commodities. The third phase should see the introduction of solid minerals, energy and derivatives while the last phase should be geared towards ensuring a strong international presence in the local exchanges.

“In furtherance of this objective, the Commission is actively promoting the development of the commodities market especially in areas of Nigeria’s comparative advantage such as solid minerals and agriculture”.

Yuguda stated that the Commission is currently implementing the 10-year Nigerian capital market master plan which was launched in 2015. It aims to: position the capital market to play a pivotal role in the emergence of Nigeria as a top 20 global economy; have a highly competitive market that engenders best practice, innovation and efficiency; and operate a capital market that combines all the elements needed to actualize Nigeria’s developmental aspirations.

In his remarks, the Minister of State in the Ministry, Dr. Uchechukwu Ogah, described solid minerals as a thing of the future and expressed the belief that in the near future it could assist greatly in the development of the economy of the country.

He said, “ We are moving away from oil because we believe that mineral is a thing of the future and the President has done a lot in initiating projects that are helping us to explore some of the few minerals that are of high value in the country.

“Apart from that, the President has equally initiated what we call Presidential Artisanal Gold Mining initiative which led to the presentation of the first locally mined artisanal miner’s gold bar to Mr. President. The proposal is that we are looking at a good policy where these golds would be explored, produced and if possible refined in Nigeria so that we can use it to shore up our reserve and to ensure that the depreciation on our Naira is controlled when we have a good number of raw resources to shore-up our reserve.

“So we believe that there is a lot we can do together that will be mutually beneficial to both parties and our country. I believe that both of us can work purposefully to grow the sector collectively for the interest of the nation”.

Ogah described the sector as a huge one that could help the country grow its, economy, as well as shore up its external reserve and commended the SEC on the collaborative offer.

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Capital Market

Govts, Businesses Raise N4.6 Trillion from Capital Market in Five months



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Nigerian governments and companies have raised some N4.6 trillion in new capital from the capital market so far this year, already more than 100 per cent above the total capital raising recorded for the whole of 2020.

Preliminary report at the weekend at the Nigerian Exchange (NGX) Limited indicated that the Exchange has facilitated more than N4.6 trillion so far this year. The capital raising cut across several asset classes including debts and equities and from several issuers including the Federal Government, state governments and companies.

The Federal Government has sustained the monthly issuance of its Federal Government of Nigeria Savings Bonds (FGNSBs) in addition to other intermittent debt issuances. The government, at the weekend, listed two tranches of savings bonds worth N700.5 million on the NGX. The savings bonds were issued in May.

A breakdown of the fund-raising entities showed five broad categories – Federal Government, state governments, quoted companies, fund management finds and special purpose vehicles (SPVs).

Also, a breakdown of the capital raising by issuers showed that the Federal Government accounted for the largest part of the new issues.

Other public sector issuers included Lagos State and Kogi State governments. Corporate issuers included BUA Cement, Fidelity Bank, Flour Mills of Nigeria, Transcorp Hotel and Sunu Assurances Plc.

The report also showed many maiden issues by companies, including debt issuances by Me cure Industries and Emzor Pharmaceuticals.

The latest report further illustrated that the capital market has continued to provide critical funding in debts and equities to governments and companies, after the market braced the COVID-19 lockdowns and disruptions in 2020 to pool more than N2 trillion funding.

Last year, issuers or fund-raising entities had included sovereign issuances by the Federal Government, sub-national issuances by the Ondo State Government, debts and equities raising by several quoted companies, including Dangote Cement, Flour Mills of Nigeria, Consolidated Hallmark Insurance, Coronation Insurance, formerly Wapic Insurance, International Breweries and Golden Guinea Breweries.

Other corporate issuers in 2020 included Abbey Mortgage Bank, C & I Leasing, UACN Property Development Company (UPDC), United Capital, AIICO Insurance, Red Star Express and Interswitch Africa One. Investment management companies such as ARM Investment Managers and Meristem Wealth Management also launched new collective investment schemes.

The market had, particularly, provided innovative finance through SPVs to support key infrastructural development and corporate restructuring. These included issuances such as Axxela Funding 1, LAPO MFB SPV, FBNQ MB Funding SPV and Primero BRT Securitisation SPV.

Despite the pandemic, the market has seen many landmark transactions since 2020, including maiden bond issue by Nigeria’s largest quoted company and Sub-Saharan Africa’s largest cement company, which floated a N100 billion bond, the largest single corporate bond issue in the capital market.

Also, International Breweries, the Nigerian subsidiary of Anheuser-Busch InBev (AB InBev), had in 2020 raised N164.39 billion through a rights issue, reported to be the largest right issue and a major indirect capital injection by a foreign investor in a Nigerian company.

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