According to the Nigeria Stock Exchange’s (NSE) X-compliance report for August 2017, AMCON executed a block divestment of its stake in Niger Insurance Plc amounting to 724.3 million shares in favour of Etha Ventures Limited at 0.54 kobo per share. Approval for the deal was granted by the NSE on the 21st of March 2017 with Fundvine Capital and Securities Limited acting as the stockbroker for the deal.
Who is Etha Ventures
Data from the financial statements of Niger Insurance for the year ended December 2016, showed that Niger Insurance had outstanding shares of 7,739,495,702 shares. This makes the deal a significant one as the new owner now holds 9.3% of the issued share capital of the insurance firm.
Nairametrics attempted to find out who the new owner of this significant stake was. A simple internet search yielded results that were linked to the current Imo state governor Rochas Okorocha. One search result which extensively and comprehensively detailed his credentials along with his many business interests as a form of due diligence on him in anticipation of the 2011 Gubernatorial elections, listed him as being the founder of numerous organizations, including Etha Ventures Limited. This information was culled from his CV hosted on the website www.rochasokorocha.org, which has since become defunct.
Piqued by this, more search was conducted. This led to the obtainment of a document that was published on 9th March 2015 by a financial services consulting company, further showing Owelle Rochas Okorocha as the contact person for Etha Ventures Limited, –one of its clients
Not satisfied with these results, we carried out a company search at the Corporate Affairs Commission (CAC) to find out who the directors and major shareholders of Etha Ventures Ltd are. At the first attempt, the Company’s file wasn’t found in the registry. We were told that the reasons for this could be any of the following: that another lawyer made a request for the file; the company is in caution (meaning the company is under litigation); or amendments are being made to the directors or shareholders; or it is simply lost. A search on the CAC online data base showed that the company was registered on the 20th of October 2000 with its registered address in Abuja, FCT.
Why is this significant?
This raises a number of concerns, chief of which is the clandestine nature of the transaction behind both AMCON’s involvement in Niger Insurance, and the subsequent sale its stake, ostensibly to a politically exposed individual or organization. The block sale was not reported in the regular corporate disclosure section of the NSE but contained in an inconspicuous corner of the X-compliance report. Furthermore, the lack of visibility in the new investors raises a potential red flag that existing or future shareholders would want to take note of.
Etha Ventures’ 9.3% stake is a significant one, and existing shareholders and analysts would want to understand what this investor brings to the table. What is its strategic strength, its experience in this line of business, and its competence? Is any long-term strategic game in play? It would be interesting to find out. Further, what would be the impact of this on the company’s corporate governance? Would it deteriorate? If it deteriorates, it diminishes the company’s future prospects as an acquisition target.
Also important to add that the Imo State Governor is currently embroiled in a political controversy over the demolition of a popular market in the state capital and has also been severally criticised for his handling of the state’s pensioners.
AMCON sale transparent?
Disregarding the fact that Rochas may be a bit cozy with some of AMCON’S directors, AMCON has a mandate to dispose the assets it acquired from bank defaulters at the best possible price, giving due consideration for the prevailing market condition. A violation of this overarching guiding principle (i.e. disposing such assets for less than it would fetch at the market would be a red flag).
The asset in question, Niger Insurance shares, was sold for N0.54, 4 kobo or 8% higher than its price at the open market. This is a fair deal from AMCON’s perspective. We don’t know if the asset was bid for by multiple bidders, but if it was, there should naturally be no concerns of partiality or preference for a particular buyer because any other buyer could simply go to the market to purchase the stock, except there isn’t a sufficient amount of its shares on the market. 54 percent (4,238,218,840) shares belong to retail investors.
Niger Insurance currently list Chrome Oil, a company owned by another close associate of Rochas, Emeka Offor as the highest shareholder with about 2,122,015,587 or 27% of the shares of the company.