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BusinessDay 12 Apr 2018

Thursday

Thursday 12 April 2018 18 BUSINESS DAY C002D5556 Investor Helping you to build wealth & make wise decisions Access, Lafarge, Seplat, UBA to migrate to NSE Premium Board IHEANYI NWACHUKWU The Nigerian S t o c k Exchange (NSE) will on Monday April 16 migrate Access Bank Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and United Bank for Africa Plc​to the Premium Board. The admission of these companies to the Premium Board listing segment for the elite group of issuers implies that they have met the Exchange’s most stringent corporate governance and li​sting standards. They will be joining the likes of Dangote Cement Plc, FBN Holdings Plc, and Zenith International Bank Plc already on the Premium Board. The Board is a platform for showcasing companies who are industry leaders in their sectors. Premium Board features companies that adhere to international best practices on corporate governance and meet the Exchange’s highest standards of capitalisation and liquidity. FMDQ Learning Access Bank Plc currently has a market capitalization in excess of N347.135billion with shares outstanding of 28.927billion units. The share price stood at N12 as at April 10, 2018. Lafarge Africa Plc with share price at N41 as at April 10, 2018 has a market capitalisation in excess of N355.610billion and shares outstanding of 8.673billion units. Seplat Petroleum Development Company Plc priced at N665.1 as at April 10, 2018 is valued at N391.374billion on the Nigerian bourse, with outstanding shares of 588.44million units. The equity value of United Bank for Africa Plc is N405.263billion at N11.85per share as at Tuesday April 10, 2018. The bank’s outstanding shares are 34.199billion units. A Premium Board listing gives a company access to a global pool of investors who are focused on companies managed in conformity to the highest standards in their target markets. The NSE requires that companies seeking admission to its Premium Board should satisfy one set of Listing Standards for the NSE Main Board, as well as comply with the following: meet the minimum market capitalisation requirement of N200 billion on the date The Exchange receives its application (or at the time of listing – for new listings). Also, the company must be evaluated under the NSE’s Corporate Governance Rating System (CGRS) and achieve a minimum rating score of 70percent. The company must satisfy either: a minimum free float requirement of 20percent of its issued share capital, or the value of its free float shares is equal to or above N40billion on the date the Exchange receives its application to list.​ Deal makers appetite dampen on political risks Shareholders seek FG intervention on Oando’s technical suspension A group of Concerned Shareholders of Oando Plc called on President Muhammadu Buhari; Vice President Yemi Osinbajo; Senate President Bukola Saraki; Speaker, House of Representatives, Yakubu Dogara and other well meaning Nigerians to prevail on the Nigerian Stock Exchange (NSE) and the Securities & Exchange Commission (SEC) to lift the technical suspension placed on the shares of Oando without any further delay. Speaking at a press briefing on Tuesday, April 10, 2018, in Lagos, the shareholders said the continued suspension of Oando shares was sending wrong signals to the global community about the seriousness of the Federal Government in attracting foreign direct investments to bolster the economy. It will be recalled that the Nigerian Stock Exchange (NSE) on 18th October 2017 announced that it had placed the shares of OANDO Plc, a public quoted energy company trading on the floor of the NSE, on ‘full suspension for 48 hours.’ Thereafter on 23rd October 2017, the NSE further announced that it had placed the shares of the Company on ‘Technical Suspension’. The NSE by a letter dated 18th October 2017 informed Oando PLC that the suspension of its shares by the NSE was done in compliance with a directive issued to it by the Securities & Exchange Commission (SEC). The head of the Concerned Shareholders of Oando, Patrick Ajudua, while advancing reasons for the immediate lifting of the Technical Suspension, noted that the continued suspension of Oando shares could also send wrong signals about the prevailing harsh operating environment in the country. He also stressed that the Federal Government must protect a prosperous company like Oando from going down if it wanted to demonstrate to the investing world about its seriousness to attract investors to the country. According to him: “the continued suspension of OANDO Plc is a wrong signal to the global market about the prevailing harsh operating environment in Nigeria, and this is at variance with the Federal Government’s initiatives to diversify the economy through increased Foreign Direct Investment. We appeal to the Federal Government to intervene in our travails because the International investment community is keenly watching. The value of the investment we as shareholders of Oando have made is being eroded because of this continued suspension of trading. We appeal that this suspension order must be Introduction to Securitisation (2) Continued from last week Benefits of Securitisation From providing funding and cash flow requirements to deepening the capital markets, securitization offers diverse benefits to the originators, investors and the capital markets as a whole. Some of these include, but are not limited to the following: To the originator, securitisation offers cash flow and balance sheet management benefits. It can be used to improve balance sheet liquidity by converting long-term and illiquid receivables into funds that can be used for valuegenerating investments. Furthermore, it can be used to diversify funding sources and reduce the cost of the originator’s borrowings. In addition, securitisation offers a useful mechanism by which originators transfer risks associated with their loan portfolios to parties that are more willing or able to manage them. This is achieved through the transforming of cash flows and risks of the collateral pool into those of the securities issued on the pool. To the investor, securitisation provides an investible asset class which could offer attractive yields. Securitised assets can also be tailored in a manner that meets the investor’s unique needs and risk appetite. To the capital markets, securitisation contributes to market depth and liquidity, and offers price discovery to relatively illiquid assets, as well as facilitates greater access to funds for new firms or firms with low credit ratings. Risk Considerations Whilst securitisation can provide benefits to capital market participants and associated stakeholders, it also creates unique risks which can lead to unintended consequences. Cash flow risk: This is the possibility of poor cash inflows from the pooled assets, threatening investors’ ability to recover the value of their investments. Amortisation risk: This emanates from a potential mismatch between cash flow receipts on the receivables (pooled assets) and cash outflow payments on the securities. For example, in a scenario where a long-term security is collateralised by short-term credit card receivables, the security will almost certainly be exposed to amortisation risk. Securitisation requires detailed risk management structures to ensure that the inherent risks are properly understood and managed. In addition to ensuring that the securitised products are of good credit rating, investors are expected to adopt a robust forward-looking analysis that considers the fundamental characteristics of the underlying assets and captures the interplay between economic factors, collateral performance and legal structure of the transaction to measure identified risks effectively. Securitisation, as an asset class, presents an interesting opportunity for the Nigerian DCM, promoting diversity of investment assets and supporting the deepening of the Nigerian financial markets. The next edition in this series will delve into the fundamentals of ABS and MBS.

Thursday 12 April 2018 C002D5556 BUSINESS DAY 19

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