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NGX Suspends Trading on GTBank Shares Ahead of Delisting

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GTBank Branch

By Dipo Olowookere

In preparation for the eventual delisting of shares of Guaranty Trust Bank (GTBank) Plc from its trading platform, the Nigerian Exchange (NGX) Limited on Friday, June 18, 2021, placed the banking stock on a full suspension.

GTBank, a tier-one lender trading its equities on the exchange, intends to transform into a financial holding company (Holdco) so as to offer a wide range of services it is restricted to do.

Some years ago, the Central Bank of Nigeria (CBN) directed banks in the country to offload their subsidiaries not performing core lending services.

This was after many deposit money banks (DMBs) were delving into different business ventures, including insurance, stockbroking, asset management, amongst others.

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For the CBN, which regulates the banking industry in Nigeria, most of these banks were losing focus and were not supporting businesses that need funds to grow and then stimulate the economy in the process.

To address this issue, the apex bank asked banks to sell off their non-banking assets and this forced many of them to offload their companies not offering core banking services.

However, there was an opening for banks to still delve into other sectors within the financial and capital markets and this was by operating as a Holdco.

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A few of them towed this path, including FBN Holdings, Stanbic IBTC Holdings and FCMB Group.

Not wanting to be left out, GTBank is joining the party and to achieve this, it is delisting its banking arm, which is the popular GTBank from the stock exchange.

GTBank will now operate as a private company, while the new Holdco, Guaranty Trust Holding Company Plc, will now be a public company. The shares of this new firm will be listed on the NGX after the delisting of GTBank.

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Last Friday, the stock exchange informed the investing community of the latest development, announcing the suspension of trading on GTBank shares.

In the circular sighted by Business Post, the NGX explained that the rationale behind placing GTBank stocks on full suspension is to “prevent trading in the shares of the bank” in preparation of its “eventual delisting”

Before trading on its stocks was suspended on Friday, GTBank closed at N28.55 on Thursday after appreciating by 50 kobo or 1.78 per cent.

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

Africa Prudential Suffers Decline in H1 2021 Revenue, Profits

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Africa Prudential office

By Dipo Olowookere

The first half of 2021 was not good for Africa Prudential, the company’s financial statements released on Friday and analysed by Business Post has shown.

The top and bottom lines of the results depreciated in the first six months of the year, with the revenue generated going down to N1.7 billion from N1.9 billion in the same period of 2020.

The results revealed that revenue from contracts with customers went down by 12 per cent to N517.7 million from N590.7 million due to a significant renegotiation of fees rate by customers along with its corporate actions revenue lines as well as slow sign off of contracts within the period in digital consultancy.

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Also, the interest income decreased to N1.2 billion from N1.3 billion as a result of a decline in interest on loans and advances and a nil income on treasury bills relative to HY 2020.

However, the other income improved to N86.3 million from N23.8 million and this was largely buoyed by withholding tax credit notes recovered, which raked in N65.8 million for the company. In H1 2020, there was no provision for this item. Also, the dividend income recorded in the first half of this year waned to N9.3 million from N21.2 million last year.

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In the period under review, Africa Prudential said personnel expenses gulped N287.6 million, lower than N318.2 million of last year and this was due to a slice in wages and salaries to N264.1 million from N291.0 million in the period.

However, the other operating costs rose to N450.4 million from N323.0 million as a result of an increase in professional fees, directors fees and other emoluments, legal and professional expenses, amongst others.

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On the bottom line, the company posted a profit before tax of N972.3 million, lower than the N1.2 billion achieved in the first half of last year, while the profit after tax went down to N827.6 million from N1.1 billion on account of the business considerations around revenue and operating cost, with the Earnings Per Share (EPS) declining to 41 kobo from 54 kobo in H1 2020.

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Economy

Market Rises 0.21% as Appetite for Total Nigeria Shares Persists

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Total Nigeria shares

By Dipo Olowookere

The interim dividend proposed by the board of Total Nigeria and the news of the settlement of the dispute between Oando Plc and the Securities and Exchange Commission (SEC) is starting to drive appetite for the two energy stocks at the Nigerian Exchange (NGX) Limited.

Business Post reports that appetite for Total Nigeria shares persisted on Friday and this helped the market to close 0.21 per cent higher when trading activities were ended during the session.

This buying pressure increased the All-Share Index (ASI) of the bourse by 82.38 points to 38,667.90 points from 38,585.52 points and expanded the market capitalisation by N43 billion to N20.147 trillion from N20.104 trillion.

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Universal Insurance was the best-performing stock at the last trading session of this week, appreciating by 10.00 per cent to close at 22 kobo.

Oando gained 9.97 per cent to trade at N3.97, Total Nigeria grew by 9.96 per cent to N203.20, Cutix improved by 9.82 per cent to N4.81, while Guinness Nigeria appreciated by 9.14 per cent to N31.65.

However, University Press finished the session as the worst-performing equity with a price depreciation of 9.03 per cent to settle at N1.41.

Champion Breweries lost 8.89 per cent to sell for N2.05, Red Star Express declined by 3.03 per cent to N3.20, International Breweries went down by 2.80 per cent to N5.20, while NAHCO fell by 2.65 per cent to N2.20.

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At the close of transactions, the market breadth remained strongly positive with 30 price gainers and 11 price losers.

On the activity chart, the trading volume rose by 13.36 per cent to 230.3 million shares from 203.1 million shares, the trading value appreciated by 34.04 per cent to N2.3 billion from N1.7 billion, while the number of deals increased by 4.18 per cent to 4,135 deals from 3,969 deals.

Fidelity Bank closed the day as the most traded stock for transacting 24.8 million shares valued at N59.4 million and was followed by Zenith Bank, which exchanged 24.3 million equities worth N604.1 million.

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United Capital transacted 14.5 million shares worth N102.6 million, UBA traded 11.0 million shares valued at N85.3 million, while Sovereign Trust Insurance transacted 10.4 million stocks for N2.9 million.

In terms of the performance of the sectors, apart from the insurance counter, which depreciated marginally by 0.01 per cent, the four other major sectors closed positive.

The energy index maintained its strong position with an appreciation of 3.98 per cent, the banking counter rose by 0.51 per cent, the consumer goods space rose by 0.40 per cent, while the industrial goods sector appreciated by 0.04 per cent.

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Economy

Nigeria Records 28 Deals Worth $1bn in H1 2021

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28 Deals Worth $1bn

By Modupe Gbadeyanka

A new report from Baker McKenzie has indicated that in the first half of 2021, Nigeria and South Africa recorded a surge in mergers and acquisitions (M&A).

However, Kenya, another key economy in Sub-Saharan Africa, witnessed a slight decline in the period under consideration, according to an analysis of Refinitiv data.

It was revealed that 28 deals worth $1 billion were recorded in Nigeria in H1 2021, indicating that by transaction volume, it rose by 17 per cent and by value, it soared by 267 per cent.

Refinitiv data reveals that domestic transactions decreased by 15 per cent to 11 deals, but deal value increased by 342 per cent year-on-year to $726 million.

Also, cross-border transactions increased by 13 per cent to 17 deals, with deal value rising by 8 per cent to $296 million, with financial companies being the prime targets for inbound deals at four transactions, showing a 100 per cent increase y-o-y and deal value of $10 million, a 327 per cent increase year on year.

Once again, the US served as the primary investor for Nigerian companies, with four deals worth $13 million. The largest inbound deal into Nigeria in H1 2021 was Mwendo Holdings BV’s (South Africa) $182 million acquisition of Blue Lake Ventures Ltd (Media and Entertainment), announced in June 2021.

In a statement obtained by Business Post, the Head of Africa for Baker McKenzie, Mr Wildu du Plessis, stated that while investors from the US have shown interest in Africa for some time, under President Joe Biden, the general consensus is that US engagement with African countries is focusing on strengthening relationships in a strategic, co-operative way.

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It has been noted that Mr Biden will continue with successful bipartisan programmes implemented by his predecessors, as well as further encouraging US trade and investment in the continent.

Considering that American companies were the top investors in two of Africa’s largest economies in the first half of 2021, dealmakers are clearly comfortable with Biden’s approach to Africa.

South Africa

The value of M&A transactions in South Africa in H1 2021 amounted to $52 billion, with 169 deals announced in the period. Compared to the first half of 2020, transactions volumes decreased by 8 per cent but deal value increased by 958 per cent in the first half of 2021.

Refinitiv data showed that the volume of domestic transactions increased slightly to 80 deals, a 10 per cent increase y-o-y. Domestic transactions in South Africa in H1 21 were worth $46.7 billion, a dramatic 2,148 per cent increase. Further, cross-border transactions increased 17 per cent to 89 deals, with deal value surging 251 per cent to $5.4 billion.

According to Marc Yudaken, Partner in the Corporate/M&A Practice at Baker McKenzie in Johannesburg, “Despite the excellent start to 2021, the unrest in South Africa threatens to impact the positive strides made in terms of foreign investment into the country in the first six months of this year.

“For the sake of South Africa’s post-pandemic recovery, the turmoil engulfing our country has to be ended before investors are forced to seek less risky alternatives.

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“Foreign investors will only ramp up their investments if they are confident their assets are safe. They need political and economic certainty and must have confidence that there is rule of law in the countries in which they invest.”

High technology companies were the primary targets for inbound deals in South Africa, with 12 transactions, representing 200 per cent in deal volume and a deal value of $160 million, an increase of 1,997 per cent when compared to the same period last year.

“It’s no secret that African consumers have shown a growing reliance on technology across multiple platforms, even well before the pandemic struck.

“The growth of the digital economy across the continent has naturally been accelerated by the pandemic and this unabated demand for technology has caused extensive cross-sector disruption, with the financial, energy, transport, retail, health and agricultural sectors all seeking opportunities to expand their tech infrastructure in order to acquire the necessary skills and innovation needed to keep up with demand.

“Fintech is also a popular tech sector for investment across Africa and specifically in South Africa, Kenya and Nigeria, with health-tech, mobility and agritech also attracting growing interest,” Mr du Plessis noted.

“It looks like South Africa is leading the way in terms of high-value deals in the tech sector and we expect this tech M&A trend to continue as the continent gears up to operate in the post-pandemic new normal,” he added.

The United States was the primary investor for South African companies, with 16 deals (an increase of 60 per cent) valued at $496 million (an increase of 340 per cent).

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This was helped by TPG Capital LP’s $200 million acquisition of Airtel Africa Plc-Mobile (telecommunications) announced in March 2021. The largest inbound deal in H1 2021 was Temasek Holdings (Pte) Ltd’s (Singapore) $500 million acquisition of Leapfrog Investments (financials), also announced in March 2021.

Kenya

In H1 2021, deal-making in Kenya decreased by 14 per cent with 18 deals in the period and deal value decreased by 96 per cent to $11 million.

Financial companies were the prime targets for inbound deals with five transactions, representing a 150 per cent increase, with deals valued at $11 million, a 78 per cent decrease.

Nigeria served as the primary investor for Kenyan companies with three deals. The largest inbound deal into Kenya in H1 2021 was Liberty Holdings Ltd’s (South Africa) $8 million acquisition of Liberty Kenya Holdings Plc (insurance), announced in March 2021.

In its reaction to this, Mr Du Plessis said the decrease in M&A volume and value in Kenya in H1 2021 is expected to be temporary as the country continues to implement pandemic recovery policies, including a vaccine rollout strategy for the adult population with a planned completion date of mid-2022.

“The country’s reputation as an East African investment hub, in addition to its strong technology capabilities, means that it is just a matter of time before Kenya takes up its rightful place as one of the top target countries for technology transactions in Africa,” he submitted.

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