Economy
Nigeria’s Asset Under Management Grows 25% to N3.5trn—Agusto
By Adedapo Adesanya
Research and ratings agency, Agusto & Co., has estimated that Nigeria’s assets under management (AuM), as of the end of 2022, grew by 25 per cent to N3.5 trillion ($7.8 billion).
This makes Nigeria the third largest investment management zone in sub-Saharan Africa, after South Africa and Morocco.
In a note shared with Business Post, it was stated that this growth was driven in part by increased investor confidence following the gradual rise in the yields offered on naira-denominated investments during the latter half of the year and growth in dollar-denominated portfolios as discerning Nigerians hedge against the persistent devaluation of the naira.
Nonetheless, despite Nigeria’s population estimate of 220 million people and the high foreign exchange remittance inflows from Nigerians living in the diaspora ($20.9 billion or N9.3 trillion in 2022), the asset management industry continues to underachieve.
The firm noted that the industry’s growth remains constrained by a large informal sector (estimated at 65 per cent of GDP), a high poverty rate of 40 per cent and limited investment opportunities offered by the Nigerian capital market.
It warned that the challenging operating environment in Nigeria has led to an erosion of real incomes and purchasing power, prompting a surge in investors’ inclination towards dollar-denominated assets.
“The escalation of the year-over-year inflation rate from 15.6 per cent in January 2022 to 21.37 per cent in December 2022 is indicative of an unfavourable macroeconomic climate. In addition, the parallel market exchange rate stood at N750/$ as of December 31, 2022, indicating a 63 per cent arbitrage from the official market rate and a 32 per cent depreciation from N570/$ recorded in the corresponding period of the prior year.”
According to Agusto, Naira-denominated investments have lost their lustre in light of current market conditions, and investors are instead looking to high-yield alternatives and FCY-denominated investments.
“In 2022, segregated portfolios accounted for more than half of total managed assets (52 per cent), which amounted to N1.76 trillion as of December 31, 2022, – 40.2 per cent higher than in 2021 – marking a noteworthy shift in the Industry as segregated portfolios overtook collective investment schemes (CISs) in terms of AuM share for the first time in three years.”
Segregated portfolios include privately managed discretionary and non-discretionary client funds, as well as other private collective investment schemes, which provide investment options that are tailored to the unique risk profiles and investment objectives of individual clients. Unlike collective investment schemes, segregated portfolios provide more flexibility and autonomy as they are not directly subject to the scrutiny and monitoring of the Securities and Exchange Commission (SEC).
Agusto estimated that CISs accounted for 42 per cent (N1.37 trillion) of AuM in 2022, while alternative assets – comprising publicly-listed private equity and infrastructure funds – accounted for the remaining 6 per cent (N345 billion) of the asset management industry’s managed assets as at the same date.
“Investors have shown a growing inclination towards privately managed portfolios rather than the often more restrictive and conservative collective investment schemes, as they seek to gain relatively higher yields from investments.
“In addition, many asset managers have focused more on fostering the growth of segregated portfolios through their investment advisory services while also improving product distribution and enhancing customer experience.
“Furthermore, segregated portfolios have continued to account for a large portion of the Industry’s AuM due to the large volume of funds invested by high-net-worth individuals (HNIs) and corporations seeking exposure to specific investment vehicles (in many cases regional Eurobond issuances).”
These specific investment options typically offer relatively higher returns and provide a currency hedge, which may not be widely accessible with collective investment schemes,” it noted.
Giving an outlook, Agusto & Co. anticipates a moderate increase in the size of the asset management industry, with an estimated average growth rate of 15.9 per cent over the next three years.
This will result in total AuM reaching the N4 trillion mark by 2024, it said.
“Growth is expected to be driven by various factors, including increased investments from pension fund administrators and institutional clients.
“The unification of exchange rates is anticipated to result in the repatriation of funds formerly invested in international money markets and reignite foreign interest in naira-denominated assets.
“Furthermore, the anticipated growth trajectory is likely to be fuelled by an increase in the size of segregated portfolios, infrastructure funds and REITs, amongst others.
“The prolonged deterioration of macroeconomic fundamentals, which might severely reduce discretionary income and the marginal inclination to save, remains a risk to the growth forecast.”
By Adedapo Adesanya
The euphoria around the recent appreciation of the Naira eased on Wednesday, December 11 after its value shrank against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N5.23 or 0.3 per cent to N1,547.50/$1 from the N1,542.27/$1 it was valued on Tuesday.
It was observed that spectators’ activities may have triggered the weakening of the local currency in the official market at midweek as they tried to fight back and ensure the value of funds in foreign currencies strengthened.
The domestic currency was regaining its footing after the Central Bank of Nigeria (CBN) launched an Electronic Foreign Exchange Matching System (EFEMS) platform to tackle speculation and improve transparency in Nigeria’s FX market.
At midweek, the Nigerian currency depreciated against the Pound Sterling by N3.56 to close at N1,958.68/£1 compared with the preceding day’s N1,955.12/£1 and against the Euro, it slumped by 34 Kobo to trade at N1,612.66/€1, in contrast to the previous session’s N1,613.00/€1.
As for the black market segment, the Naira lost N45 against the American currency during the session to quote at N1,670/$1 compared with the N1,625/$1 it was traded a day earlier.
A look at the cryptocurrency market showed a recovery following profit-taking as the US Consumer Price Index report matched economist forecasts.
The news was enough to convince traders that the Federal Reserve is certain to trim its benchmark fed funds rate another 25 basis points at its meeting next week.
The move also saw Bitcoin (BTC), the most valued coin, return to the $100,000 mark as it added a 2.9 per cent gain and sold for $100,566.12.
The biggest gainer was Cardano (ADA), which jumped by 15.00 per cent to trade at $1.16, as Litecoin (LTC) appreciated by 10.4 per cent to sell for $121.76, and Ethereum (ETH) surged by 7.0 per cent to $3,929.30, while Dogecoin (DOGE) recorded a 6.7 per cent growth to finish at $0.4181.
Further, Binance Coin (BNB) went up by 5.2 per cent to $716.72, Solana (SOL) expanded by 4.6 per cent to $229.77, and Ripple (XRP) increased by 4.2 per cent to $2.43, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
By Aduragbemi Omiyale
The Dangote Refinery located in the Lekki area of Lagos State has made its first export of premium motor spirit (PMS) just three months after it commenced the production of petrol.
In September 2024, the refinery produced its first petrol and began loading to the Nigerian National Petroleum Company (NNPC) on September 15.
However, due to some issues, the facility has not been able to flood the local market with its product, forcing it to look elsewhere.
In a landmark move for regional energy integration, Dangote Refinery has partnered with Neptune Oil to take its petrol to neighbouring Cameroon.
Neptune Oil is a leading energy company in Cameroon which provides reliable and sustainable energy solutions.
Dangote Refinery said this development showcases its ability to meet domestic needs and position itself as a key player in the regional energy market, adding that it represents a significant step forward in accessing high-quality and locally sourced petroleum products for Cameroon.
“This first export of PMS to Cameroon is a tangible demonstration of our vision for a united and energy-independent Africa.
“With this development, we are laying the foundation for a future where African resources are refined and exchanged within the continent for the benefit of our people,” the owner of Dangote Refinery, Mr Aliko Dangote, said.
His counterpart at Neptune Oil, Mr Antoine Ndzengue, said, “This partnership with Dangote Refinery marks a turning point for Cameroon.
“By becoming the first importer of petroleum products from this world-class refinery, we are bolstering our country’s energy security and supporting local economic development.
“This initial supply, executed without international intermediaries, reflects our commitment to serving our markets independently and efficiently.”
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited remained in the green territory on Wednesday after it rallied by 0.31 per cent on the back of sustained bargain-hunting activities by investors.
Business Post reports that all the key sectors of the market closed higher at midweek as a result of the renewed interest in local equities.
Data showed that the energy index appreciated by 2.59 per cent, the insurance space grew by 2.34 per cent, the industrial goods sector improved by 0.15 per cent, the banking counter expanded by 0.06 per cent, and the consumer goods industry rose by 0.04 per cent.
At the close of business, the All-Share Index (ASI) gained 302.71 points to settle at 98,509.68 points compared with Tuesday’s closing value of 98,206.97 points and the market capitalisation added N183 billion to close at N59.715 trillion versus the preceding day’s N59.532 trillion.
It was observed that the level of activity yesterday waned as the trading volume, value and number of deals decreased by 65.93 per cent, 49.22 per cent, and 12.70 per cent, respectively.
On Wednesday, a total of 320.1 million stocks valued at N6.5 billion were transacted in 7,943 deals, in contrast to the 939.4 million stocks worth N12.8 billion traded in 9,098 deals.
The busiest equity at midweek was eTranzact, which transacted 70.3 million units for N474.2 million, Universal Insurance traded 23.8 million units worth 8.1 million, Zenith Bank exchanged 21.2 million units valued at N933.5 million, FBN Holdings sold 18.6 million units worth N491.2 million, and UBA traded 14.0 million units valued at N465.8 million.
At the close of transactions, 34 shares ended on the gainers’ log and 17 shares finished on the losers’ chart, representing a positive market breadth index and strong investor sentiment.
Africa Prudential gained 10.00 per cent to quote at N14.30, Conoil also improved by 10.00 per cent to N352.00, and RT Briscoe expanded by 10.00 per cent to N2.42, as Golden Guinea Breweries jumped by 9.95 per cent to N7.18, while NEM Insurance grew by 9.74 per cent to N10.70.
However, Julius Berger lost 10.00 per cent to close at N155.25, Secure Electronic Technology shed 9.52 per cent to trade at 57 Kobo, Multiverse declined by 7.63 per cent to N5.45, Haldane McCall tumbled by 6.07 per cent to N4.95, and Honeywell Flour crashed by 5.62 per cent to N4.70.
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