One of Nigeria’s leading investment banking groups, LeadCapital Plc, has launched a new mutual fund called Lead Balanced Fund (LBF).
In this interview with Nairametrics, the Group Managing Director of LeadCapital Plc, Mr Wale Adewumi, gave a detailed insight as to why investors should take advantage of the company’s offer of 5 million (units of N100 each at par).
Mr Adewumi also used the occasion to talk about the milestone LeadCapital Plc has recorded since its establishment.
Below are the interview excerpts:
Nairametrics: What do you think people need to know about Lead Capital Plc?
Adewumi: To talk about LeadCapital Plc is like giving a whole day’s lecture. We are a leading investment bank in Nigeria and our footprints strategically cut across the country. We have been around for over three decades.
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Since we came on board, we have been involved in several landmark transactions. We are very strong in the federal government’s privatisation exercise. We also have subsidiaries out there blazing their own trails; we have Lead Securities and Investment Limited (“LSI”) which is a stock brokerage firm with a large clientele and doing very well in the stock market. LSI has a trading portal named LeadTrader. LeadTrader has been up and running for about four years now and we are the second firm to launch such platform in the Nigerian capital market. It is a platform that allows investors to trade on securities listed on the Nigerian Stock Exchange at anytime and anywhere they are. It also has an app that enables the use of mobile devices like phones to trade.
Lead Capital has another subsidiary called Lead Asset Management Limited (“LAM”), which is in the business of fund/portfolio management. LAM assists investors to invest their money in different assets classes for decent returns.
Nairametrics: How best can you describe what Lead Balance Fund entails?
Adewumi: The Lead Balance Fund, which we have just launched its initial public offer, is a fund that seeks to offer investors the benefits you enjoy from fixed income securities, together with what you benefit from investing in equities.
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It is, however, pertinent to understand that equities for some people right now seems a no-go area. Equities, if you understand it very well, is an asset class that gives investors the highest yield on a long run basis. Although, there can be a bearish season where prices are not going up, this is often dictated by the state of the economy. As we all know, Nigeria was in recession about two and a half years ago and only started recovery towards the middle of last year. In view of this, the post-recession effects are still lingering in the economy.
Most companies are not doing very well in terms of profitability as a fallout of the recession that the country went through. The stock market has been stagnated as a result of this. Interestingly, post-recession, the economy is expected to witness a boom again and as that happens, we would see the reflection of that in the equities market.
We are at a point where we should begin to see improved performance by the corporates, especially the listed companies which will translate into price gains for investors in their equities.
So, at this point that we are launching the Lead Balanced Fund, is really the most auspicious time to do this, in the sense that stock prices are at rock bottom now. The prices of equities are really at bargain levels now. When we invest now, over the next year or so as I said, when we expect the economy itself to have experienced some upward trend and growth, stock prices would also gone up. The level of the growth can be quite significant, it can be up to 50% growth or some stocks can even double their prices, as the case may be.
As an investor in the Lead Balanced Fund, you will benefits from these gains, much more than what you get from investing in just the fixed income securities.
Nairametrics: What is the confidence you are giving to people for the mouth-watering returns?
Adewumi: I think for everybody, we just have to be optimistic about the future of our economy. The Government is really the one that is dictating the pace of our economy.
Without campaigning for the incumbent administration, we can see the strides they are making in different sectors of the economy. Transportation, for instance, the rail network they are building will translate into huge economic benefits. The agriculture sector is another area where the Government is really committed to giving more support.
Besides that, the Nigeria Commodity Exchange will soon take off. When the exchange takes off, it will help in efficient and effective trading of agriculture produce across the country. For the power sector, even though we are not seeing much improvement, we should know that the sector has now been privatised, and following the privatisation, there has been continuous engagement to ensure that the lingering problems are resolved. Ultimately, when power supply increases, our economy will be better for it.
From all these explanations and observations that I have made about the government, one would naturally think that the future is looking brighter. The government is working towards providing a more enabling environment to operate.
In addition, some of the indices coming up are very attractive; inflation is down, while our external reserves is growing. These are indications that the future is looking better for Nigeria.
Nairametrics: Is this fund open to everyone?
Adewumi: As a mutual fund by definition, it is a publicly-accessible fund. It is regulated by the Securities and Exchange Commission and members of the public can confidently invest in it, it is safe and every investor should embrace it and enjoy the rewards that come with it.
Nairametrics: How will you differentiate the Lead Balanced Fund from the initially-launched Lead Fixed Income Fund?
Adewumi: The difference it has compared with the first one (i.e., Fixed Income Fund), is that it takes advantage of the fact that equities are usually in the long-term, much more rewarding than the fixed income.
Trying not to play-down the fixed income, which gives you a steady and a stable return, any investment you make into equity now, is expected to give you superior returns in 2-3 years. This is much higher than what you would get with fixed income. This is really the catch for the balanced fund.