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Forte Oil Suspends N20b Offer

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  • Forte Oil Suspends N20b Offer

The board of directors of Forte Oil Plc has decided to suspend the energy group’s bid to raise new equity funds. Forte Oil had earlier secured regulatory approval to float a supplementary capital raising through a book building.

Company Secretary, Forte Oil, Akin Olagbende, in a statement released at the Nigerian Stock Exchange (NSE), stated that the board had taken a strategic decision to put the offering on hold pending the conclusion of an ongoing corporate restructuring.

According to him, the company is currently exploring opportunities to maximize emerging opportunities in the Nigerian energy sector, which will be to the ultimate benefit of all stakeholders.

Forte Oil had started the book building for its N20 billion offer for subscription with main consideration for qualified institutional investors and high net worth individual investors.

Forte Oil had planned to raise N20 billion in new equity funds under its new capital raising, after it successfully raised N9 billion in debt issue. The indigenous energy company has approval to raise up to N71 billion under a N100 billion capital raising programme approved by the shareholders of the company.

Forte Oil had opened up the book building for the N20 billion offer through a notification to stockbrokers. The book building was targeted at high net worth institutional and individual investors as defined under the rules and regulations of the Securities and Exchange Commission (SEC).

SEC identifies qualified institutional investors to include an individual investor with at least personal net worth of N300 million excluding automobiles, homes and furniture. Others qualified institutional investors included fund managers, insurance companies, investment and unit trusts, multilateral and bilateral institutions, market makers, professionally-managed staff securities purchase schemes, trustees and custodians and stockbroking firms.

Group Executive Director, Finance and Risk Management, Forte Oil Plc, Mr. Julius Omodayo-Owotuga, had explained that the capital raising would be used to boost working capital and operations.

He said the net proceeds will provide the company with the necessary liquidity to actualise its growth strategies.

He noted that Forte Oil plans to raise funds from its shelf programme in tranches, on the basis of emerging opportunities, in order to ensure that investors receive optimal value for their investments.

Omodayo—Owotuga said the company plans to acquire upstream assets and related downstream businesses as it seeks to grow its portfolio and enhance future returns.

According to him, the company would explore inorganic option of mergers and acquisitions to consolidate its growing market share in the oil and gas business while strengthening its balance sheet to support long-term growth objective.

“We have five pillars of strategies going forward. We want to concentrate on high-margin products. We want to focus on lubricants. We have been working on our LPG as we improve our facility in Abuja, Kano and Apapa. We want to strengthen our balance sheet. We want long term capital so that interest expenses will come down. Diversification is part of our strategy to boost out revenue base. We want to buy upstream assets; we will focus on mergers and acquisition within the space available. We have been growing our market share organically. We are looking at opportunity to grow the retail outlet through inorganic strategy,” Omodayo-Owotuga said.

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

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Investment

Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

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Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies

Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.

According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.

The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.

It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.

“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”

Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.

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Economy

Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

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  • Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension

Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.

OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.

In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.

Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.

Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.

While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.

Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.

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Economy

Gold Dips by 2 Percent on Better Than Expected Job Report

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  • Gold Dips by 2 Percent on Better Than Expected Job Report

Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.

The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.

The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.

“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.

Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.

Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.

The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.

Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.

Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.

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