EFG Hermes last month announced its acquisition of Primera Africa, a Nigerian brokerage house. In an interview with Nairametrics, Kato Mukuru, Managing Director – Head of Frontier Markets Research for the firm, discussed the company’s achievements so far, and its plans for the Nigerian unit.
Following your acquisition of Primera Africa, what products does EFG Hermes plan to introduce to contribute to the growth of the Nigerian economy?
To contribute to the growth of the Nigerian economy, EFG Hermes is focused on bringing new international capital flows into Nigeria from the Middle East, Asia, Europe, the Americas and other African countries. By working with Nigeria’s leading corporates to make sure they are well capitalised, we believe that we best contribute to their growth and the subsequent growth of the Nigeria economy.
What do you envisage are some of the challenges EFG Hermes might experience in the Nigerian market and how do you plan to tackle them?
Our biggest challenge in Nigeria will be liquidity. Following the global financial crisis, daily liquidity in the Nigerian stock market has fallen significantly. We, like all stockbrokers in Nigeria, need to focus on building domestic and international liquidity.
Whilst we will work with our international distribution platform to bring in more liquidity, we believe that focusing on domestic liquidity is a priority. And to be active in this debate, we believe that a local presence is a prerequisite.
With this acquisition out of the way, are there any plans for EFG Hermes to list on the Nigerian Stock Exchange?
Today EFG Hermes is focused on building the No.1 institutional brokerage in Nigeria. Listing on the exchange is not today’s priority; we are more focused on building a sustainable and leading franchise in Nigeria.
What has been your success story so far in other countries of your operations?
Since the build out of the EFG Frontier product, there has been numerous success in both the Asian and African parts of the product. The recent Extel Survey rated us the number 1 Frontier Markets Brokerage firm which is as a result of our strong research and trading products.
In 2017 we established a full on the ground Pakistani operation, which is under the space of a year, has become the biggest offshore broker by market share. We have also recently opened on the ground in Bangladesh, as we try and replicate our Pakistani success, where we plan to obtain a trading license in the near future.
As per Bloomberg rankings, we are the biggest executing broker in Bangladesh by some margin and are number 2 in Pakistan and Sri Lanka year to date.
In Africa, our early focus has been building out the East African product using our Kenyan operations as a hub. Within the year our market share has grown and as per the most recent market share stats in June this year, we are the 4th biggest broker in Kenya. We are currently number 3 market share in Mauritius and number 1 in Rwanda.
In terms of West Africa, despite up until now not having a license in Nigeria we have still maintained a strong presence, and are currently number 4 market share for foreign flows year to date. In BRVM we are no.1 market share for offshore clients.