Business News
Chapel Hill Denham raises N17.85 billion via NIDF series 6
Chapel Hill Denham has announced that it has raised N17.85 billion in its Nigeria Infrastructure Debt Fund (“NIDF”) which closed on Tuesday.
Chapel Hill Denham has announced that it has raised N17.85 billion in its Nigeria Infrastructure Debt Fund (“NIDF”), which closed on Tuesday. The sixth capital raise (NIDF Series 6) was launched in June 2017 and oversubscribed as a number of domestic investors subscribed to it. This was disclosed in a statement issued by Chapel Hill Denham and seen by Nairametrics.
Some of the domestic investors are pension funds, insurance companies, asset managers, family offices, and other qualified individual investors.
Anshul Rai, NIDF
What you need to know about NIDF: The Series 6 offer attracted 2 new pension fund investors bringing the total number of PFAs participating in the Fund to 22. Following the close of Series 6, and with N58 billion (US$190 million) in capital, the NIDF is the single largest issue of non-sovereign credit in Nigeria.
Details: The fund has been delivering NIDF on all its key investment objectives, as investors enjoy consistent, attractive and predictable real returns (above inflation), along with low volatility and principal preservation.
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The statement revealed that the total returns for the two and a half year period ending December 2019 were 69.2% (assuming distributions were reinvested).
It stated, “In a low yield environment, the NIDF presents a compelling investment case – the Fund targets a gross return of 300bps to 450bps over and above the benchmark FGN 10yr bond yields.
“Besides delivering attractive returns, the NIDF is also at the core of Nigeria’s economic transformation by adding to the country’s infrastructure stock, channelling institutional capital into productive assets, and supporting sustainable economic growth.”
Partners of Chapel Hill Denham, Bolaji Balogun and Philip Southwell said, “This fundraise reflects the excellent relationships we have with our investors given the strong results of NIDF since inception.
“We are grateful to our investors, particularly Nigeria’s pension funds, for their ongoing support and look forward to putting this capital to work on their behalf.”
Chief Executive Officer, NIDF, Anshul Rai, said, “Despite the challenging economic environment we continue to see compelling opportunities in the infrastructure sector in Nigeria. NIDF’s progress demonstrates the importance of local currency financing in Nigeria and the continued desire for well-structured, long-term project finance.”
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About NIDF: The Chapel Hill Denham’s Nigeria Infrastructure Debt Fund is the first and only infrastructure debt fund dedicated to and domiciled in Nigeria. The Fund is an Infrastructure Fund under the rules and regulations of the Securities & Exchange Commission, Nigeria and the National Pension Commission, Nigeria. The Fund’s Units are listed on the FMDQ OTC Securities Exchange, Nigeria.
The Fund has registered a programme for issuance of up to two billion Units with par value of N200 billion. NIDF is sponsored by Chapel Hill Denham and Chapel Hill Denham Management Limited is the Fund Manager of NIDF.
Business News
IMF advises banks to suspend dividend payment
However, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income.
In an article published on its website, International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, advised banks to halt dividend payment for now. According to her, with the expectation of a deep recession in 2020 and partial recovery in 2021, banks’ resilience will be tested. Therefore, having in place strong capital and liquidity positions to support fresh credit will be essential.
According to the article, one of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations which are not insignificant.
IMF staff calculate that the 30 global systemically important banks distributed about US$250bn in dividends and share buybacks last year.
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In a circular dated January 31, 2018, the Central Bank of Nigeria (CBN) stipulated new conditions for eligibility of Nigerian banks to pay dividend and the quantum of dividend to be paid out by banks who are eligible. Prior to the release of the circular, dividend payout policy for Nigerian banks had been spelt out in Section 16(1) of BOFIA 2004 (as amended) and Prudential Guidelines for DMBs of 2010. The circular provided guidelines and restrictions around divdidend payout for banks based on NPL ratio, CRR levels, and Capital Adequacy Ratio (CAR).
However, there were no regulatory restriction on dividend payout for banks that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than 5%. However, it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities. Indeed, current economic realities demand caution.
Current economic realities mean that banks face asset quality threats, further devaluation threat which may impact capital in some cases, and lower profits which in turn affects the quantum of capital retained. Ideally, these should reflect in NPL ratio and CAR ratio and should immediately restrict banks’ ability to pay dividend. However, there is usually a time lag before these ratios begin to reflect the new economic realities. Therefore, IMF’s advise may come in handy for many banks.
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That said, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income. Banks like Zenith and Guaranty Trust have a good history of consistent dividend payment with attractive yields which is a major attraction for many shareholders.
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Economy & Politics
CBN reduces MPR to 12.50%, holds other metrics
Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% and retains CRR at 27.5%, Liquidity ratio at 30%.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50%.
Governor, CBN, Godwin Emefiele, disclosed this while reading the communique at the end of the MPC meeting on Thursday in Abuja. Meanwhile, other parameters such as the Cash Reserve Ratio (CRR) remained at 27.5%, Liquidity ratio at 30%.
READ ALSO: Bankers decry rise in public debt, weak economy
Highlights of the Committee’s decision
- MPC cuts MPR by 100 basis points to 12.50%
- CRR stood at 27.5%
- The Liquidity Ratio was also kept at 30%
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CBN MPC cuts policy rate by 100 basis points to 12.5 %, maintains other parameters constant.
— Central Bank of Nigeria (@cenbank) May 28, 2020
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According to Emefiele, the decision of the MPC to reduce the Monetary Policy Rate was informed by the impact of the Covid-19 pandemic on the economy, increased inflationary pressure, restrictions in international trade and more.
He highlighted the decline in the nation’s GDP as well as the decline in the manufacturing and non-manufacturing purchasing index which were attributable to slower growth in production, rate of unemployment, amongst others.
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Economy & Politics
Buhari seeks approval from green chamber to borrow fresh $5.5billion
FG also seek approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.
President Muhammadu Buhari is seeking the approval of the House of Representatives to borrow fund to finance capital projects at the federal and state (to support state governors) levels in the 2020 budget.
This request was disclosed via the official twitter handle of the House of Representatives.
The president’s letter, which indicated that the fund would be sourced locally and internationally, was read on the floor of the House of Representatives by the Speaker, Femi Gbajabiamila, during plenary on Thursday, May 28, 2020.
READ ALSO: 4 key sectors CBN plans to pump money into
In the letter to the lower chamber, Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.
Although the tweet did not contain the total amount of loan that is being requested, reports suggests that the President is seeking approval to borrow the sum of $5.513 billion from external sources to finance 2020 budget deficit and support state governments to meet challenges caused by the coronavirus pandemic.
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CBN MPC cuts policy rate by 100 basis points to 12.5 %, maintains other parameters constant.
— Central Bank of Nigeria (@cenbank) May 28, 2020
President @Mbuhari is also seeking the House approval to borrow locally & internationally to finance capital projects as well as finance projects to support state governors in the 2020 budget
The letter was referred to the House Committee on loans & debt management. #HousePlenary— House of Reps NGR (@HouseNGR) May 28, 2020
Details shortly…
