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NGX Group Targets Private Equity Investments, Mergers, Acquisitions

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NGX Group Shares

By Dipo Olowookere

In order to make shareholders enjoy the benefits of demutualisation and maximize returns, the Nigerian Exchange (NGX) Group Plc is currently undertaking some financial planning activities.

These steps are being engineered by the Group CEO of the organisation, Mr Oscar Onyema, and they include the possibility of mergers and acquisitions, private equity investments, treasury management, capital allocation and fundraising.

According to Mr Onyema, the company is well-positioned to achieve these goals, going by its financial performance in 2020, expressing optimism that these strategies would make the organisation’s shares attract investors when they are eventually listed on the NGX Limited.

“As the group progresses its plans to list on Nigerian Exchange Limited, there are exciting days ahead. The financial performance of the Group in 2020 showed strong resilience and prospects for growth.

“The group ended 2020 in a sound financial position with net asset growth of over 10 per cent to N31.28 billion and income and resulting surplus after tax valued at N6.02 billion and N1.84 billion respectively.

“In the context of COVID-19 pandemic, we maintained tight cost controls, which reduced expenses by 13 per cent despite investments in technology that allowed remote operations with zero downtime,” he had said.

On Thursday, September 9, 2021, the NGX Group held its Annual General Meeting (AGM) in Abuja. It was the first yearly shareholders’ gathering after the demutualisation of the Nigerian Stock Exchange (NSE).

At the meeting, shareholders approved all the resolutions proposed by the board, including the re-election of the non-executive directors who were retiring by rotation; the election of the members of the audit committee; the proposed remuneration for the board and non-executive members of the erstwhile national council of the NSE; and the introduction of equity-based incentives to employees’ remuneration, including an Employee Share Ownership Plan (ESOP) and a Performance-Based Long-Term Incentive Plan.

NGX Group, leading by example as a new corporate entity, is committed to the highest governance standards, recognising its role in critical capital markets infrastructure.

Much like leading exchanges in the world today (London Stock Exchange Group, Intercontinental Exchange, Singapore Exchange, Japan Exchange Group) and other African exchanges such as Johannesburg Stock Exchange and FMDQ, the demutualised NSE gave rise to a group structure with attendant benefits.

Today, NGX Group stands as the non-operating holding company with three (3) subsidiaries – the operating Exchange, Nigerian Exchange Limited led by Mr Temi Popoola, as the Chief Executive Officer (CEO); the independent regulatory company, NGX Regulation Limited led by Ms Tinuade Awe as the CEO; and the real estate company, NGX Real Estate with Mr Gabriel Igbeka serving as Acting CEO. Each of these entities is governed by independent boards, the composition of which was not only strategic but in line with acceptable practices.

At an Extra-Ordinary General Meeting (EGM) of the then members of NSE in March 2020, a resolution was passed pertaining to the appointment of the inaugural board of NGX Group, post demutualisation.

The process relating to the selection of council (board) members was duly followed and the identified candidates were taken through a rigorous due diligence exercise before passing through the internal governance process, being submitted to the Securities and Exchange Commission for approval and thereafter, presented to previous members at the 2020 EGM.

The members agreed to the importance of maintaining continuity and preserving The Exchange’s collective knowledge and learned experience (institutional memory) as well as retaining stakeholder confidence and maintaining market stability.

It was, therefore, agreed that the composition of the Boards would comprise individuals selected from the erstwhile National Council and external candidates. This understanding was contained in the Scheme of Arrangement dated 20 January 2020 between the NSE and the dealing and ordinary members of the NSE in respect of the demutualisation of the exchange (the Scheme).

The scheme was approved at the Court Ordered meeting held on 3 March 2020. The approved Scheme of Arrangement was sanctioned by the court on May 14, 2020, and filed at the Corporate Affairs Commission (CAC) on June 1, 2020, and it became effective on the date it was filed at the CAC.

NGX Group’s board currently has 11 members and out of the 11 directors, five have direct or indirect shareholdings in the company providing strong representation for the company’s shareholders.

In addition, going above the statutorily required minimum that a public company shall have at least three independent directors (S.275 (1) CAMA 2020), NGX Group went with four independent directors.

Transition agreements expected to last for 18 months were also agreed and it was recognized that subsequent composition of the Board following this transition period will evolve in line with existing rules and regulations, market standards, competitive realities and succession planning policies.

The composition of the inaugural board – comprising some members of the erstwhile council and new members – was approved at the EGM, on the condition that their appointment would become effective post demutualisation.

The market continues to repose confidence in NGX Group evidenced by the statement from the Chairman, Association of Securities Dealing Houses of Nigeria, representing the largest shareholder group in the company, Mr Onyewenchukwu Ezeagu, who stated prior to the recent 60th AGM, “As major shareholders, we were involved in all the processes of demutualisation.

“We are comfortable with the agenda of the meeting as we have been part of the whole process. The proposed resolutions had been made public in the course of the demutualisation. The meeting will bring about a renewed relationship between the NGX Group and its stakeholders.”

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

Nigerian Exchange Jumps 0.14% on Renewed Investor Confidence

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nigerian stock exchange

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited further appreciated by 0.14 per cent on Friday on the back of a renewed investor confidence, triggering a rise in the level of activities.

This was largely driven by demand for the shares of FBN Holdings, Ecobank, Cutix, amongst others and at the end of the session, the trading volume rose by135.98 per cent to 510.2 million units from the previous day’s 216.2 million units.

In the same vein, the trading value increased yesterday by 73.47 per cent to N5.9 billion from N3.4 billion, while the number of deals appreciated by 28.39 per cent to 5,485 deals from 4,272 deals.

Business Post reports that news that Mr Femi Otedola has acquired First Bank further triggered a buy pressure on FBN Holdings stocks, closing again as the most active with the sale of 154.4 million units valued at N1.9 billion.

Ecobank transacted 56.1 million units worth N421.5 million, Transcorp traded 32.0 million units valued at N32.3 million, NGX Group sold 29.9 million units valued at N723.2 million, while Wema Bank exchanged 24.1 million units worth N17.4 million.

On the price movement chart, Cutix led the gainers’ group with a price appreciation of 10.00 per cent to trade at N6.05, followed by Unilever Nigeria, which gained 9.85 per cent to quote at N14.50.

ABC Transport appreciated by 9.68 per cent to sell for 34 kobo, PZ Cussons gained 9.26 per cent to trade at N5.90, while Total Energies went up by 6.17 per cent to settle at N204.90.

On the other hand, the losers’ gang was led by NEM Insurance after its value went down by 8.57 per cent to N1.92. Ikeja Hotels dropped 7.83 per cent to N1.06, NGX Group depreciated by 6.58 per cent to N22.00, Coronation Insurance fell by 5.88 per cent to 48 kobo, while NASCON declined by 5.48 per cent to N14.65.

During the trading day, the insurance sector lost 1.75 per cent, while the energy, consumer goods, banking and industrial goods counters gained 2.48 per cent, 0.31 per cent, 0.29 per cent and 0.04 per cent respectively.

At the close of transactions, the All-Share Index (ASI) improved by 59.15 points to 41,763.26 points from 41,704.11 points, while the market capitalisation grew by N30 billion to N21.794 trillion from N21.764 trillion.

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Economy

Investors, Exporters Exchange Dollar at N415.07 Friday

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naira and dollar

By Adedapo Adesanya

The Naira to Dollar exchange rate at the Investors and Exporters (I&E) segment of the foreign exchange (FX) market in Nigeria maintained stability on Friday.

According to data harvested from FMDQ Securities Exchange by Business Post yesterday, the domestic currency was traded at N415.07/$1, the same amount it was sold on Thursday.

It was observed that the local currency closed flat during the session despite a significant increase in the demand for forex at the market window.

At the last trading session of the week on the FX category, transactions valued at $240.97 million were carried out compared with the $103.16 million recorded at the preceding session, indicating a surge of $137.81 million or 133.6 per cent.

But at the interbank segment of the FX market, the Nigerian currency had a bad day against the United States currency as it depreciated by 5 kobo or 0.01 per cent to sell for N410.96/$1 in contrast to N410.91/$1 it traded a day earlier, according to data from the Central Bank of Nigeria (CBN).

At the digital currency market, four of the 10 cryptos monitored by this newspaper on Friday declined, with Bitcoin (BTC), the most popular of the digital currencies, losing 4.7 per cent to sell at N34,434,127.72.

The loss occurred after it went on to chart a brand new all-time high in the week as the market witnessed the approval of the first-ever futures BTC ETF in the US.

Litecoin depreciated by 5.8 per cent to sell at N107,359.81, Ripple (XRP) tumbled by 2.7 per cent to N621.99, while Tron (TRX) recorded a 0.4 per cent drop to trade at N55.94.

However, Ethereum (ETH) recorded the highest gain of the day with a 5.0 per cent growth to trade at N2,400,000.00, Dash (DASH) climbed higher by 3.4 per cent to sell for N112,490.00, Dogecoin (DOGE) rose by 3.2 per cent to N149.35, Cardano (ADA) grew by 0.8 per cent to sell at N1,278.84, Binance Coin (BNB) improved by 0.5 per cent to quote at N197,123.45, while the US Dollar Tether (USDT) increased by 0.2 per cent to sell for N564.99.

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Economy

Road Infrastructure Tax is to Bridge Nigeria’s Revenue Gap—Nami

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Road Infrastructure Tax

By Adedapo Adesanya

To help cover Nigeria’s revenue shortfall, the Federal Inland Revenue Service (FIRS) says it is proposing the introduction of road infrastructure tax by making the informal sector contribute to building a modern society.

The Executive Chairman of FIRS, Mr Muhammad Mamman Nami said this when a delegation of the Nigeria Union of Journalists (NUJ) led by its National President, Mr Chris Isiguzo, met him in Abuja.

Mr Nami said the proposed road tax to be administered by the FIRS will provide the government with adequate funding for road construction, rehabilitation, and maintenance, as well as providing the needed security for roads in the country.

According to the FIRS boss, “One quick and very important intervention required of you is in the area of the Road Infrastructure Funding Scheme that the country needs in order fix our roads and bringing the informal sector to the tax net.”

He noted that in many jurisdictions, road users pay for the use of road infrastructure, adding that this should not be seen as an additional burden on the people because it has the potential of making life better for all.

Speaking further, Mr Nami stated that Nigeria’s economy presently relies heavily on non-oil revenues to discharge its statutory responsibility of paying salaries and providing social amenities to the citizenry.

“Without the tax that you pay, governments at all levels would not be able to fulfil their mandate to the electorates. Tax money also helps to ensure the roads you travel are safe and always in good condition,” he said.

He disclosed that the recent rise in the price of crude oil ordinarily should have impacted positively on the Petroleum Profit Tax payable by oil-producing companies. However, it has shown otherwise due to some reasons.

On the challenges facing the service of delivering on its mandate, he said “crude oil production has been limited by OPEC quota. Nigerian OPEC quota as at July 2021 was about 1.5 million barrels per day as against its crude oil production budget of 1.8 million barrels per day.

“This is a shortfall of 300,000 barrels per day. Our average daily crude oil production is around 1.250 million barrels per day as against the allocated 1.5 million barrels per day OPEC quota which has resulted in a shortfall of almost 250,000 barrels per day mainly caused by crude oil theft and force majeure declared by some of the IOCs.

“The total shortfall to FGN budgeted production is about 550,000 barrels per day.

“Huge losses brought forward and un-recouped capital allowances reported by most of the companies due to production shut in and the fall in oil price in 2020 as a result of the covid-19 pandemic which reduced their revenue.“

He said with challenges in the oil and gas sector, reforms have been carried out by the agency with a visible impact on the economy such as the deployment of technology in tax administration to improve domestic revenue mobilisation in view of dwindling oil prices.

Mr Nami added that the service created 10 Value Added Tax, VAT, Regional Coordination Offices across the country to drive collection of VAT.

He said, “We have commenced the usage of VAT Form 002A for enrolment and tracking of branch offices of major VAT payers. This will certainly improve our VAT collection and capacity. We achieved 114.66 per cent of our VAT collection target in the first half of the year.

“It will interest you to know that the service collected a total of N4.2 trillion between January to September 2021. This feat was achieved as a result of the efficiency and effectiveness of the TaxProMax Solution and intelligence/data we gathered, mined and analyzed in the period under review.

“The service successfully facilitated both the mock and external audits for the ISO 27001:2013 certification of the Exchange of Information (EOI) centre, to meet international information security management standards.”

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