CAP Plc, a subsidiary of UACN Plc is in the paintings and coatings business. The company was established originally as ICI investments limited in 1957, but became ICI Nigeria Limited in 1965. Following the promulgation of the Indigenization decree in 1972 and 1977, ICI Nigeria Limited sold 40%, and then 60% to the Nigerian Public and changed its name to Chemicaland Allied Products Limited. In 1992, ICI Nigeria Limited finally disposed-off its minority 40% shareholding in CAP Plc when it sold 35.7% of its equity to UAC of Nigeria Plc and the rest to the Nigerian public on the floor of the Nigeria Stock Exchange. Currently, UAC of Nigeria Plc holds about 50.09% of the company’s equity.

Piggybank to the rest of the UACN group

The company has consistently acted as a lender to other members of the UACN Group. Figures from financial statements for the 12 months ended December 2016, showed that the company lent N500 million to Livestock Feeds Plc, another UACN subsidiary, which has since been repaid. The loan was at a mutually agreed commercial interest rate which was however not stated. UPDC Properties financial statements for the half year ended June 2017 also show that the company borrowed N263 million from CAP Plc.

The trend continued for the half year ended June 2017, even though the company perhaps in error failed to include the total amount of loans it lent to related parties. Its receivables dropped from N508 million in 2016 to N5 million in 2017. N6.6 billion of loans to related parties were impaired (in other words, the loans have been written off).



Why is CAP the inter-company lender?

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CAP Plc has had to lend to its sister companies due to the challenges that they face. Livestock Feeds has had to borrow for working capital. UPDC has struggled with negative retained earnings, and poor returns from its hotel arm.

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Could the loans be put to better use?

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While interest rates on the loans are at a commercial rate, the funds could be put to other productive uses. CAP also takes loans from commercial banks, as data from the half year 2017 financial statements show the company had borrowings of N111 million which begs the question: Why lend money to subsidiaries, yet have to take loans from commercial banks? CAP Plc would be better off paying shareholders increased dividends than giving the loans, as the other subsidiaries are still struggling despite the loans.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via


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