The importance of stable electricity in the quest for economic development can never be overstated. Unfortunately, many factors (mainly infrastructural inadequacies) have continually militated against the actualisation of stable electricity in Nigeria. It is in this regard that Cutix Plc has been playing a major role over the past three decades, manufacturing and distributing assorted, quality cables used in the conduct of electricity across the country.
For our company focus this, we shall be focusing on this Nigerian company. Let’s take you through everything you need to know about Cutix Plc’s effort to redefine the cable industry. We shall also be examining the company’s business model, products, target market, ownership structure, investment prospects, and most important the financials.
About the company
Incorporated in 1982, Cutix Plc is an Nnewi-based cable manufacturing company which was established in 1982. The company manufactures and distributes various kinds of cables such as electrical wires, telecommunication wires, to automobile wires. Some typical examples of the company’s wide range of products are insulated copper conductors, PVC insulated, and sheathed flat twin/three-core copper cables. Others are low tension bare aluminium conductors and reinforced aluminium conductor steel wires.
Cutix Plc also manufactures bare stranded copper conductors as well as bare copper conductors which are used for earthing electrical installations and the production of copper cables.
The company’s incorporation and NSE-listing
Cutix Plc is the brainchild of Dr Ajulu Uzodike who resigned from a well-salaried job at Raychem Corporation in 1981, to establish one of the foremost wire manufacturing companies in Nigeria. In the early days of the company, he used Adtec Limited (a venture capital firm he also founded) to kick-start some of the initial projects.
According to information available on the company’s website, Cutix Plc started operations with a startup capital of about N400,000 which was collectively raised by the founder and eighteen others; consisting of his friends and his family members.
The company was initially incorporated on November 4th, 1982 as a private limited company before it transformed into a publicly-owned company. Its shares were then listed on the Nigerian Stock Exchange’s main board on December 8, 1987. Cutix Plc currently has a market capitalisation of N2,906,181,342.90.
Following Cutix’s listing on the NSE, which made it the first Eastern Nigeria-based company to do so, it was able to raise the necessary capital to facilitate its expansion drives. Consequently, the company built its own factory/several cable production lines, installed and commissioned more machines, and obtained more licenses from the authorities.
The company’s ownership structure
About 60.38% of the company’s shares are currently held by the investing public. The remaining 39.62% shares are split thus:
- Uzodike Gilbert Obiajulu: 90,172,226 units, holding (10.24%).
- R.C Onyeje And Company (Nig) Ltd: 55,416,000 units holding (6.29%).
- Nsoedo Samuel: 54,333,333 units holding (6.17%).
- Nigerian Reinsurance Corporation: 53,333,333 units holding (6.06%).
- Nzewi Christopher Emengini: 50,571,310 units holding (5.74%).
- AMI Nigeria Limited: 45,093,991 units holding (5.12%).
The company’s founder and other top executives
Dr Gilbert Obiajulu Uzodike is the Founder of Cutix Plc. Born in 1949 in Onitsha, he studied for his primary and secondary school education in Eastern Nigeria before proceeding to the University of Lagos where he obtained a B.Sc. Mech. Engineering in 1974. He then proceeded to Harvard Business School, where he obtained an MBA in 1977.
He has founded and managed several companies asides Cutix Plc, following his successful career as an employee business executive. These companies include cosmetics manufacturing company Ugora Limited, Raychem Adtec Limited, Adswitch Plc etc.
He currently sits on the board of quite a number of establishments, including his position on the Board of Trustees of the Anambra State Security Trust Fund.
Other notable executives/board members of the company are-
- Mrs Uche C. Igbokwe (CEO)
- AMB. Okwudili Nwosu (Chairman)
- Mr. Nnamdi Ike (Non-Executive Director)
- Mr. Mathias Umego (Independent Non-Executive Director)
The company’s target market
Cutix Plc targets everyone, particularly real estate developers, governments, electricity companies, private companies, and anyone else who deals in the construction of residential and office buildings. It also targets telecommunications companies like MTN and 9mobile, who make use of telecommunication wires such as those manufactured by the company.
But the company faces competition
Cutix Plc faces competition from various quarters, including those posed by other cable manufacturers in Nigeria such as Coleman Technical Industries Limited which, though not listed on the Nigerian bourse, is still one of the biggest names in the sector. Other competitors are Sinitor & Co Nigeria Limited, Emarvel Electrical Cables, Berliac Engineering Cables Limited, and Vecan Cable Limited, etc.
Note that out of all the cable manufacturing companies in Nigeria, Cutix Plc is the only one whose shares are publicly traded on the Nigerian Stock Exchange.
Focus on the company’s financial performance
The company’s unaudited third quarter 2019 result shows that it earned a total revenue of N4.1 billion as against N5 billion worth of revenue earned during the comparable period in 2018. Unaudited profit for Q3 2019 stood at N300 million as against N440 million in Q3 2018.
Over the past five years (i.e., between 2014 and 2018) Cutix Plc’s revenue has been on a steady rise. The company reported N2,234,959,000 for the year ended April 2014. By the end of FY 2015, revenue had increased to N2,358,412,000. The rise is similar to 2016, with N2,835,863,000. By 2017, total revenue had reached N3,675,712,000 and in
Similarly, Cutix Plc performed relatively well in terms of profits. The company recorded a profit after tax of N207,116,000 in 2014. However, profit decreased to N149,209,000 in 2015, only to increase yet again to N190,551,000 in 2016, N257,498,000 in 2017, and N440, 295 in 2018.
In conclusion, Cutix Plc is doing okay, although it can do better. This is a truth that even the management of the company acknowledges. This explains why they are making serious plans for the future by developing “a new power plant, where power cable of all sizes in low voltage varieties of PVC, PE and XLPE will be produced.” It is expected that this move will, among other things, build capacity, while ensuring that they reach newer markets even as they, in turn, make profits.
Cloud services are your safest bet against data and intellectual breaches – Adejumo, Cloudflex founder
The rule of keeping data within the country of origin allows Cloudflex to collaborate rather than compete with international players.
The Twitter community went up in flames last year when the official accounts of notable personalities like Donald Trump, Elon Musk, Jeff Bezos, Bill Gates, and Barack Obama were hacked by individuals who managed to rip some followers of their cryptocurrency. Those accounts were suspended for some days pending investigations but what this did was to alert the world to the need for heightened cybersecurity in countries.
In Nigeria, particularly, where cybercrime has been on the increase in the last couple of years, cybersecurity is a touchy topic; especially since global laws expect that customer data should not be stored outside the company of origin and most of the cloud services companies are international. There is, however, a local cloud company providing cloud services for Nigerians in Nigeria.
Cloudflex was founded in 2016 and has focused on providing cloud support infrastructure and services for companies away from the company premises. Founder and CEO of Cloudflex, Remi Adejumo was a guest on Nairametrics Business Half Hour recently, where he explained that the company was created to provide tailored solutions for clients in the Nigerian space.
Having worked almost three decades in several institutions, the last of which was EcoBank Nigeria Plc where he was in charge of IT Infrastructure, Adejumo saw the opportunity to create a Nigerian-built cyber-security solution, “that is fully Nigerian and run by Nigerians.”
“This is not a service where one size fits all. We have our peculiarities as a market and we are designed to serve the Nigerian market. If you want to get a foreign cloud service, you could wait 6 to 8 weeks, but if you want to get one from Cloudflex, you could have it in 24 hours.” Adejumo explained.
When companies were making several adjustments to fully activate the remote-working policy at the peak of the coronavirus pandemic lockdown, the importance of cloud services became more obvious. Companies needed a round-the-clock server from where the staff could access data from their homes and still work seamlessly.
The rule of keeping data within the country of origin allows Cloudflex to collaborate rather than compete with international players like Microsoft Azure and Amazon’s AWS, and use one another’s platforms.
There are a lot of security concerns about cloud services which some people think is not safe enough, but cloud-service providers would still insist that they are the safest option.
“The cloud platform is far safer than your own private server because your private server is on your premises and everyone knows where it is. From experience, 70% of breaches are done by the staff of your own organisation, and having a third party manage your own platform, means that you and your staff don’t know where it is. There is a protocol in giving access from the service provider, so security is higher. The data breach is not just financial, it is also intellectual. You can secure a building as much as you want, but as long as there is a door, somebody can still go in. That is the limit to your physical server in your office premises,” Adejumo explained.
There are also advancements in predictive learning, analysis, and reactive security, that allows the cloud systems to detect and flag activities outside the patterns until it is confirmed and validated.
Like most other startups in the tech space, funding remains a challenge. Adejumo recounts that the company started off solely on his savings and proceeds from the sales of some assets. Nigerian investors appear to still be sceptical of the tech startups and the result of this is that a lot of investment in the tech space comes from outside the country.
Cloud services will play a major role in the future of cybersecurity and Cloudflex is poised to take a space in that scene. According to Adejumo, the company is in the process of securing funds for expansion, although crowdfunding is not one of the options being considered.
Interswitch: The story of one of Africa’s earliest unicorn companies
Interswitch has come a long way, pioneering the Nigerian digital payments system.
One can hardly switch from the years of carrying large volumes of cash around to the years of using a card for financial transactions in Nigeria, without mentioning Interswitch.
Like the name suggests, the company uses a ‘switching’ infrastructure to connect the different banks in Nigeria and provides the technology now used for ATM cards. From a time when the company had only 3 banks on its network, Interswitch has grown in the last 19 years and now has 11,000 ATMs across different banks on its network.
How the journey started
A young graduate working in Telnet, Mitchell Elegbe was worried by the several inconveniences Nigerians had to go through to carry out financial transactions. From making long and stressful journeys to the banks, waiting in long queues, missing transaction deadlines, and increased loss of cash to criminals, that was certainly not the easiest of times to be an adult. Some opted for bank drafts to avoid carrying cash to travel, and I remember accompanying my mother to the bank a couple of time to buy a bank draft to pay my school fees.
Many people had to join long queues at the banks on Friday evening to withdraw enough cash for the weekend, and this naturally meant that weekends became work hours for criminals. The most frustrating part of it was that the bank branches did not have any software connecting them, so customers had to continue withdrawing money from the exact branch they opened the account, even when they needed to make long business trips. Even the highway became a playfield for robbers.
The young Elegbe who had only worked two years after his National Youth Service Corps, came up with the Switch idea, but the plans did not materialise as many traditional players were not interested in buying the switch software.
Not deterred by this little glitch, Elegbe went ahead to establish Interswitch, an organisation which would use the Switch software to address the problem. This time, he got the support of Accenture, and also got buy-in from some banks to raise a part of the start-up capital. Getting a Chief Executive to head the company was the next hurdle to be crossed, as Elegbe recalls that most of the capable hands then available were expatriates “who expected to earn more than the company’s capital”.
In search of cheap labour, he had to take up the task even though he had very little experience thus resigning his job at Telnet. The shareholders and the sponsoring company (TELNET) had their concerns at first, but they gave Insterswitch a shot and under Elegbe’s leadership, the company pushed through the uncertain years to become what it is now. Eight years later after starting Interswitch, the company was valued to be worth N26 billion (over $170 million), giving massive returns to early private equity holders. The company’s network grew steadily from 7 banks to 13, and then an ATM consortium and Globacom, a mobile telecommunications provider, up till this point when it has almost all Nigerian banks and 11,000 ATMs on its network.
Though Elegbe had no shares at the outset, his impressive performance earned him and his team some equity in the company in the coming years.
“So you have somebody who invested N10 million in this business going away with N2.6 billion after eight years. That to me was real value,” Elegbe said. When you help solve big problems, Mitchell says, you’re bound to be well rewarded.
Mitchell Elegbe is now the Group MD & CEO, Akeem Lawal is Divisional CEO, Switching & Processing Group while Mike Ogbalu is CEO, Verve International.
In 2019, Visa bought a fifth of Interswitch at a valuation of $1billion, making Interswtich Africa’s first fintech unicorn.
Interswitch is the owner of Verve, an international debit card and Nigeria’s most used payment card which is said to account for over 70% of the 25 million cards in circulation in the country. The company also owns Quickteller, an online payments platform; Retailpay, a mobile business management platform; Interswitch S&P, the first Nigerian in-country interbank transaction switching and third party processing for all card brands; and Smartgov, an identity management and e-payment infrastructure for state governments. Interswitch now serves almost all the state government of Nigeria, and is present in several other African countries including Kenya and Uganda.
Just last month, the group announced the launch of Quickteller Business – a new comprehensive corporate solution focused on empowering businesses of all sizes, to facilitate payments and manage transactions from anywhere in the world– through one, simple integrated platform. The platform added to its launch offer, a three-month zero transaction fee incentive for SMEs that sign up immediately.
Buy-ins, acquisitions and buy-outs
Interswitch has had several achievements over the years, and some more distinct than others. Two-third of the company was sold to a consortium led by Helios Investment Partners in 2010, and barely a year after, Interswitch took a 60% stake in Bankom in Uganda.
In 2013 the payment processing company entered into an agreement with Discover Financial Services, and in September 2014, Interswitch acquired a majority shareholding in Paynet Group, an East-African payments provider.
In 2015 Interswitch launched a $10m investment fund for African start-ups in the payments sector, and has since then, strategically invested in other African startups in the payments services.
Interswitch has also acquired VANSO, a mobile-focused technology provider to banks. This new acquisition has VANSO’s mobile banking, SMS and security business lines being fully integrated into Interswitch’s digital commerce and technology operations in Nigeria, and across Africa.
The IPO that never was
It was in 2016 the Interswitch first hinted at an Initial Public Offering (IPO) on the London Stock Exchange and /or the Nigerian Stock Exchange as part of options to create possible exits for its backers, but that listing never happened due to “unfavourable economic situation”.
By July 2019, it was reported that Interswitch had resumed its IPO plans and enlisted JPMorgan Chase & Co and Standard Bank Group to work on the potential IPO that was expected to value the company between $1.3 billion to $1.5 billion. This listing was expected to come through by 2020, but it is believed that the COVID-19 pandemic and other economic issues which plagued 2020 may have altered the company’s plans.
A recent statement from the CEO says that Interswitch will continue with alliances in line with its growth plans, but an IPO might not be in immediate view. According to him an IPO may be considered when private equity investors want an exit out of the business.
In place of the earlier expected IPO, the company announced the listing of N23 million bond on the Nigerian Stock Exchange (NSE) in February 2020. The bond is to run at a fixed interest rate of 15% for a tenure of 7 years.
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