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Funds Management

Fidson’s plan to dominate the pharmaceutical space in the next 10 years

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Ohara Pharmaceutical increases take in Fidson, Fidson and Ohara signs partnership, Fidson Healthcare Plc, Fidson list additional shares Fidson and GSK business partnership, Fidson Healthcare Plc records 202% increase in 2020 FY pre-tax profit

Fidson Healthcare Plc held a breakfast meeting with shareholders to provide details of a N3 billion rights issue.

Nairametrics had an exclusive interview with the Founder/Managing Director, Fidelis Ayebae.

Issues discussed included the company’s 9M 2018 results, qualities he considers when hiring staff, reasons for the rights issue, and his vision for the company in the next 10 years.

Increase in energy costs and personnel costs

In response to a question from Nairametrics on what led to an increase in energy and personnel costs in the months ended September 30, 2018, Ayebae attributed this to the biotech plant.

“Basically, it’s the biotech plant, which is powered 100% by diesel and gas generators. We did not use NEPA at all. The machines are too sensitive to NEPA. Because of spikes from the generators themselves, we have also had to install UPS that cost over N300 million, so we don’t have downtime for those machines. On energy alone, we spend about N100 million a month to power it.

“In order to then maximise the cost of power, we have had to increase capacity on some of the lines. Those will require manpower, so manpower will also increase. From a staff strength of about 700 and something total one and half years ago, we are now at 1,060 people in 2018 coming into 2019. This has contributed to that.”

Increased production

“It is compensated by the number of products that will be churned out from the biotech plant. The number of products meaning more SKU infusion products, more ear drops, more eye drops, more tablets that are sugar coated and film-coated coming out.”

Product gestation

Ayebae also gave a break down of how long it takes to develop a product.

“Gestation time is 12 months. For every product that you see out there, it takes a minimum of 12 months. It takes about 6 months to perfect your formulation, and expedite your stability studies. In other words, do accelerated stability studies.

“When you find that the product is stable and okay, that is where you do your shelf life estimate. It is after that you begin the process of registration, which takes 6 to 9 months.”

People are key

“In all of these times, the people are working. You can’t fire them, because this is a scientific space. You can’t afford to lose manpower, the way you lose in say, a service business. Otherwise, you don’t exist.”

Reasons for the rights issue

Ayebae also disclosed why the company was going for a rights issue.

“One of the reasons we are going for this rights issue is to have at least a billion naira that will be used mainly for the importation of raw and packaging materials. When we import ourselves instead of buying from importers, we are able to save between 12 and 20% cost.”

He continues

“If the rights issue is successful, which it will be, we will then be able to not only have access to funding for FX, but hopefully warehouse FX with suppliers abroad so we can give them say, a year’s contract for specific raw materials, and pay in rotation.”

Why not a debt raise?

The firm had opted for an equity raise in order to deleverage its balance sheet.

“At every given time, we want to use the right mix for funding the business. We are leveraged right now in terms of borrowing. We don’t want to borrow to pay off existing loans. We want to be able to pay off existing loans from shareholders’ contribution, which is either a rights issue or public offer.

“When it comes to expansion or product development or marketing spend, these are areas that you have quick turn-around; you can then go for another mix of funding. Either borrowing from commercial banks, or issuance of commercial paper or issue a bond as it were. This, we would consider as it goes on.

“Right now we are leveraged. To deleverage, we would rather use investor funds. When we get to the point of further expansion, we would be thinking of other fund mixes. The company expects to pay off its bond by November.”

An FX loan is out of the way

The Fidson boss also shed more light on why the company was not keen on a dollar-denominated loan.

“The thing we never want to do is borrow in foreign currency because the cost of hedging the rate is high. What we are doing in that sense is to see whether our suppliers can continue to give us credit. Today, our suppliers are exposed to us to the tune of $2/$3 million dollars in supplier credit.

“If there is a movement in the exchange rate negatively, that will affect us. So we watch all the time how we play in the area of foreign exchange.

“I was in this market in 2007 and 2008, when a lot of people accessed the Daewoo loans. A lot of them are unable to pay.”

3 qualities to look for when hiring

In response to a question on qualities to look for when hiring staff, Ayebae gave an interesting take.

“I don’t sit at interview panels. I allow the younger generation in the office to interview those they can work with because my time is getting closer to retirement. I cannot be hiring people for others that are going to manage the company. I will rather they hire for themselves who they want.  I only get to seat in the final interview of a very senior manager.”

Qualities of a good staff

Three qualities in his view are essential in good staff: Ability to make quick decisions, integrity, and longevity with the company.

“The qualities I look for are very simple. Ability to think and make decisions on your feet is one of them. In this time of innovative technology, you can only make decisions if your thinking faculties are intact. The ability to think and make decisions unsupervised is key.”

He continues.

“Can this fellow be trusted? We are dealing with other people’s money because we are a publicly quoted company. Can I trust this fellow? Because you cannot be a permanent watchman, whether people are going to steal or not. You have to ask them questions that will test their integrity.”

On the third quality, he said

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“Will this person be useful in the future of this company. You may be a smart kid, but if you are not going to be able to spend time with us, 10 years, 15 years of your life working for the company, I will not want you. For a very simple reason. It is very expensive to keep replacing people, especially in the science field in which we work.

“Ideas take time to be birthed, and when they are birthed, the same scientist who had that idea must be the one to superintend it to ensure it finally comes out, either as a product or service. If this fellow has gone, what happens to that idea? Two things may happen: that idea probably dies because he was the only one;  he may even take the idea to another place.

“If those three are there, I can cope with others.”

Ten-year vision

The Fidson MD also painted a broad picture of where he expects the firm to be in ten years.

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“In 10 years, we would have trebled in both top and bottom lines. We would be an exporting company. In ten years from now, I am sure we would have discovered one or two proprietary medicines. In our research and development. We would be a research and development based manufacturing company in Nigeria.

“Will I be there? I don’t know, but I see Fidson continuing to give value to investors the way I have done. All of those landmarks have been established. The people that we are grooming to take over you saw them.”

Focus on R and D

“I see a Fidson that is bigger, better and more scientific in her approach to doing things. When I say scientific, I mean home-grown ideas that we would incubate from our R and D.”

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 [email protected]

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Funds Management

Nigeria’s pension asset under management hits N12.3trillion in December 2020

Nigeria’s pension asset under management hits N12.3trillion in December 2020.

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PenCom, unremitted pensions, Lagos State Pension Commission, LASPEC, Pension Fund Assets, PFAs make N1.69 trillion ROI  

Nigeria’s pension asset under management, as of December 2020, stands at N12.3trillion which represents a modest growth of 20% year-on-year and 0.003% month-on-month (no significant change), according to the monthly report by National Pension Commission (Pencom).

According to the report, total RSA funds increased by 20% year-on-year while the funds under both existing schemes and Closed Pension Fund Administrator (CPFA) as well, grew by 21% year-on-year.

Other Key highlights

  • As of December 2019, investments in FGN Securities accounted for 72% of the total pensions assets fund, out of which 73% was invested in Bonds and 26% in Treasury Bills.
  • As of December 2020, investments in FGN Securities accounted for 66% of the total pensions assets fund, out of which 84% was invested in Bonds and a paltry 8% in Treasury Bills, which is not unrelated to the subsisting very low yield of TB in the money market.
  • The investments in FG Bonds represent 56% of the total pension assets fund under management. The renewed and increased investments in FG Bonds can be attributed to the attractiveness of the yields of FG bonds over the Treasury Bills.
  • RSA Fund II and III accounted for 89% of the total RSA funds and 69% of the total pension assets under management as of December 2020, while others – Funds I, IV and V accounted for 31%
  • All the RSA funds, including existing scheme and CPFA recorded year-on-year growth as follows: Existing scheme (13%), CPFA(28%), Fund I (49%), Fund II(19%), Fund III(21%), Fund IV(18%).
  • As of December 2020, only N80.54million was invested under the newest RSA fund (Fund V) – specifically created for micro pensions.

What you should know

There are 4 pension fund types, with the newest recently introduced for the micro pension scheme.

The Multi-Fund structure is a framework that aims to align the age and risk profile of RSA holders, as follows:

  • Fund I – This is an optional fund. Contributors must write formally to opt for this Fund.
  • Fund II – This is the default fund for contributors aged 49 and below.
  • Fund III – This is the default fund for contributors aged 50 and above.
  • Fund IV – This is the Retiree Fund.

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Exclusives

Best performing Mutual Funds in January 2021

According to data from the SEC, 49.2% of the 118 registered funds recorded positive growth in January 2021

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Best Mutual Funds in Nigeria

Mutual funds are one of the fastest-growing asset classes in Nigeria, as data from the Security and Exchange Commission (SEC), shows that 49.2% of the 118 registered funds recorded positive growth in January 2021.

A mutual fund is a type of financial vehicle made up of a pool of money collected from various investors, with the aim of investing them in securities like stocks, bonds, money market instruments, and other assets.

According to SEC, a total of 118 mutual funds were registered as of January 29, 2021, with a net asset value of N1.57 trillion across several fund types.

Nairametrics tracked the performance of these mutual funds by comparing the fund prices as of 31st December, 2020 with the fund prices as of the last trading day of January 2021.

Below were the top-performing mutual funds in the month of January 2021. We also highlighted their performance in terms of changes in net asset value and included profiles of the funds as described on their websites.

READ: Investors pump N7 billions into New Gold ETF


Lotus Capital Halal ETF – Lotus Capital Limited (Exchange Traded Fund)

The Lotus Halal Equity Exchange Traded Fund “LHE ETF” is an open-ended fund that tracks the performance of the NSE-Lotus Islamic Index (NSELII). It is designed to enable investors obtain market exposure to the securities of the constituent companies of the NSE-Lotus Islamic Index and to replicate the price and yield performance of the index.

December 31st, 2020

Fund Price – N12.73

January 29th, 2021

Fund Price – N13.66

Return – 7.31%

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Ranking – Fifth

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Commentary: This is an Exchange Traded Fund by Lotus Capital Limited, which grew by 7.31% in the month of January. The fund also grew significantly by 51.7% in the year 2020, indicating that the fund is a delight to its investors. Also, the net asset value stood at N655.04 million as of 29th January, 2021, indicating 6.76% growth compared to N613.59 million recorded as of 31st December, 2020.

READ: Understanding how Mutual Funds and ETFs work in Nigeria

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Stanbic IBTC Aggressive Fund – Stanbic IBTC Asset Mgt. Limited (Equity Based Funds)

The Stanbic IBTC Aggressive Fund (SIAF), which was launched in June 2012, is an open-ended fund that invests a minimum of 60% of its portfolio in equities of companies listed on the Nigerian Stock Exchange (NSE) and a maximum of 40% in fixed income securities. Notably, the expense ratio for the fund is 1.5%.

December 31st, 2020

Fund Price – N2,525.55

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January 29th, 2021

Fund Price – N2,713.93

Return – 7.46%

Ranking – Fourth

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Commentary: Stanbic IBTC Aggressive Fund is the second-best performing Equity-Based fund in the month of January, growing by 7.46% to stand at N2,713.93 as of 29th of January, 2021. The net asset value also grew by 7.43% to close at N340.8 million.

READ: DV Balanced Fund to become a Money Market Fund


FSDH Dollar Fund – FSDH Asset Management Ltd. (Fixed Income Funds)

This is an open-ended mutual fund that invests in US Dollar denominated Fixed Income Securities issued by Nigerian Sovereign and Corporate Entities. The objective of the fund is to provide customers with the opportunity to invest in dollar-denominated instruments. Meanwhile, the minimum amount required to invest in the fund is $1,000.

December 31st, 2020

Fund Price – N415.1

January 29th, 2021

Fund Price – N447.7

Return – 7.85%

Ranking – Third

Commentary: The fixed income fund managed by FSDH Asset Management, recorded growth of 7.85% in January from N415.1 recorded as of the end of 2020 to stand at N447.7 at the end of January. The net asset value grew by 18.41% to close at N1.002 billion.


Paramount Equity Fund – Chapel Hill Denham Mgt. Limited (Equity-based Fund)

Paramount Equity Fund is Nigeria’s oldest mutual fund, which invests in a broad range of high-quality equities and fixed income securities. The fund aims to provide an investment vehicle that will enable unit holders to achieve consistent capital appreciation over a medium-to-long term.

December 31st, 2020

Fund Price – N16.27

January 29th, 2021

Fund Price – N17.56

Return – 7.93%

Ranking – Second

Commentary: This is an Equity Based Fund managed by Chapel Hill Denham Management, which grew by 7.93% in the month of January 2021 to stand at N17.56 as of 29th of January 2021, while the net asset value grew by 8.22% to stand at N598.19 million.


Vantage Dollar Fund – Investment One Funds Management (Fixed Income Fund)

Vantage Dollar Fund is an open-ended Unit Trust Scheme by Investment One Funds. The Fund seeks to provide investors with a bias for Dollar denominated securities an access to such securities, which ordinarily would be inaccessible to them by virtue of the minimum amount typically required to make such investments.

December 31st, 2020

Fund Price – N559.87

January 29th, 2021

Fund Price – N502.9

Return – 11.33%

Ranking – First

Commentary: This is the best performing mutual fund in the month of January 2021 and the only fund with a double-figure yield in the month under review. Vantage Dollar Fund grew by 11.33% to stand at N502.9 as of 29th of January 2021 while the net asset value also grew by 10.93%. This is quite an impressive performance as the fund primarily invests in Corporate and Sovereign Eurobonds.


 

Bubbling under……

The following funds make up the rest of the top 10 our list in ascending order:

AXA Mansard Equity Income Fund – AXA Mansard Investments Limited (Equity Based Fund)

Return – 6.69%

VETBANK ETF – Vetiva Fund Managers Limited (Exchange Traded Fund)

Return – 6.82%

PACAM Equity Fund – PAC Asset Management Limited (Equity Based Fund)

Return – 6.86%

Legacy Equity Fund – First City Asset Management (Equity Based Fund)

Return – 7.14%

VCG ETF – Vetiva Fund Managers Limited (Exchange Traded Fund)

Return – 7.16%

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