The Chief Executive Officer of Guaranty Trust Bank Plc (GTB), Segun Agbaje, has disclosed that the tier-1 bank is currently considering a holding company structure.
Agbaje disclosed this during the company’s recently-held earnings call. Responding to questions by Lanre Buluro, a Director at Chapel Hill Denham, GTBank’s CEO explained that a holding company structure will enable his company to keep up with the latest trends in the Nigerian financial services industry.
According to him, Guaranty Trust Bank had decided, about ten years ago, to shed all of its subsidiaries in order to become mainly bank-focused. However, trends in the banking and financial services sector over the last few years have informed the company’s decision to rethink its earlier decision.
For instance, Nigerian banks, which are mainly focused on pure banking, have only been able to grow their profits by 5-7%. GTBank noted that this is not sustainable enough even though those numbers are not bad.
[READ MORE: GTBank declares dividend payment for FY 2019)
He then explained further, noting that there are other lines of businesses, asides pure banking, that are doing very well in the financial services industry. One of them is payment solutions. Already, GTBank offers services along this line of business and was able to grow its profit in this space by 60%. Therefore, a holding company structure will enable GTB to better specialise/consolidate on the gains already recorded in its various business ventures outside of pure banking. He said:
“There are other lines if businesses that are doing very well. If you look at our financial statement, you will see that our payment business is growing by about 60%. So, that is an area we like.
“If you look at what is happening in the PFA space, the volume is growing everyday. And if you look at the banks and look at where a lot of their profits are coming from, you will see that a lot of it is coming from that space.
“As an organisation, we have that in the world that we live in today as opposed to ten years ago, and if you look at the landscape — what the fintechs are doing, what the telcos are doing, what asset management companies are doing, what insurance companies are doing in the financial space— that as an organisation and with the approval of the board, that it is time to consider a holding company structure.”
He went on to state that this is obviously a very delicate decision. As such, it will require a whole lot of approvals, including the approvals of regulators and the company’s shareholders.
He also disclosed that all things being equal, he might end up taking up a bigger position in the proposed GTB holding company.
Note that Segun Agbaje’s tenure as the Chief Executive Officer of Guaranty Trust Bank Plc is set to expire sometime around half-year 2020.
In the meantime, some experts have publicly reacted to this development. Igho Alonge, an investment advisor and former fixed income portfolio manager, tweeted the following:
GTB set to adopt a HoldCo structure. Mad! I always wondered why they disposed of their insurance, asset management, and pension business.
It appears the HoldCo structure adopted by Stanbic and others appears very attractive in the long term.
— Igho Alonge 💼 (@Ighodaro1) March 11, 2020
[READ ALSO: GTBank releases 2019 full year audited results)
Simply defined, a holding company, according to Investopedia, is a parent corporation that owns majority shares in other companies and can, therefore, control such companies decisions and over their management decisions.
In the Nigerian financial services industry, companies like FBN Holdings Plc, Stanbic IBTC Holdings Plc, and FCMB Group Plc are all holding companies with various subsidiaries that they oversee.
You may listen to the whole of GTBank’s earnings conference call by clicking here.
President Buhari directs Ministries of Power, Finance, BPE to seal Siemens deal
Presidency has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.
President Muhammadu Buhari has directed the Ministries of Power, Finance, and the Bureau of Public Enterprise (BPE) to conclude the nation’s engagement with Siemens AG over regular power supply.
The directive, which was issued via the Presidency’s Twitter handle on Wednesday, was to start the pre-engineering & concessionary financing aspects of the Presidential Power Initiative (PPI).
PPI is a power infrastructure upgrade and modernization Programme agreed to by the Federal Government and Siemens AG of Germany, with the support of the German Government. The ultimate goal of the initiative, according to the government, is to modernize and increase the Nigerian electricity grid capacity from its current capacity of about 5 GW to 25 GW, over three phases.
How it works: Under the PPI, Nigeria on behalf of the other shareholders in the Electricity Distribution Companies (DisCos), will invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, and transmission lines among others.
The President explained that all DisCos have, directly and through the BPE, been diligently carried along over the last 15 months to understand in detail the challenges in the electricity systems.
Funding: The funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which Nigeria will on-lend as a convertible loan to the other shareholders in the DisCos.
According to the statement, President Buhari has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.
The ultimate goal of the #NigeriaPPI is to modernize and increase the Nigerian electricity grid capacity from about 5 GW currently to 25 GW, over three phases.
— Presidency Nigeria (@NGRPresident) May 27, 2020
“To ensure fairness and transparency of the intervention, the President has also directed that the nation engage the International Finance Corporation (‘IFC’) to assist in developing the commercial structure of the intervention…
“The President has also directed that to ensure value for money and preserve the integrity & transparency of the procurement process under the Govt-to-Govt framework, Siemens AG shall be solely responsible for nominating its EPC partners to perform all onshore works; NO middlemen.
“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians,” President Buhari added.
The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari. Then the Chancellor brought along with her a business delegation that included the Global CEO of Siemens.
Nigeria and Germany agreed to explore cooperation in a number of areas, including Power.
“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians.” — President @MBuhari
— Presidency Nigeria (@NGRPresident) May 27, 2020
PPI was designed to deliver improved power supply nationwide, with attendant results in job creation, investor confidence, cost and ease of doing business and economic growth. The partnership is also expected to guarantee training & capacity building for thousands of young Nigerians (non-graduates, students & graduates).
Other goals include the creation of economic opportunities for Nigerian engineering companies that will serve as local vendors for the provision of manpower and equipment. Overall, the partnership will guarantee inflow of additional investment into the power sector.
Endeavour honours founders of Kobo360
Fixing Africa’s supply chain is clearly important for commerce on the continent.
Endeavour, a leading global movement for high-impact entrepreneurship, has honoured the founders of Kobo360, Obi Ozor and Ife Oyedele as Endeavor Entrepreneurs.
Kobo360 is a digital logistics platform that uses big data and agile technology to reduce friction and improve efficiency in the African logistics ecosystem.
Managing Director, Endeavor in Nigeria, Gihan-Mbelu, explained that the company is excited to welcome Kobo360 into Endeavor’s network which includes some of the world’s most exciting scale-up entrepreneurs and most experienced mentors and investors.
He said, “Fixing Africa’s supply chain is clearly important for commerce on the continent, and Kobo360’s rapid growth over the past 3 years is evidence that the company’s valuable services are in critical demand. Obi and Ife are inspiring founders and their relentless focus on scaling Kobo360 serves as an inspiration to high-impact entrepreneurs everywhere.”
Meanwhile, since launching in 2017, Kobo360 has surpassed several milestones, including a $30 million Series A in August 2019.
“It’s an honour to be joining this global network of high-impact entrepreneurs and to have Endeavor recognise our efforts to transform Africa’s logistics sector using technology. As entrepreneurs, we wanted to turn African problems into African opportunities.
“Focusing on logistics, Ife and I started Kobo360 to not only fix the inefficiencies that exist, but to build opportunities for the businesses we serve and most importantly, the hundreds of thousands of truck drivers across Africa. This is a fundamental milestone in Kobo360’s journey; our Global Logistics Operating System [GLOS] will revolutionize supply chain across emerging markets, Ozor, Co-founder & CEO of Kobo360.
Why these companies remain on NSE’s delisting radar
The Regulation Committee of the National Council of The Exchange (RegCom) has given approval to The Exchange to proceed with the delisting process.
Data obtained from the Nigerian Stock Exchange (NSE) has revealed that about seven companies have been on the delisting radar of the Exchange since December 2019.
They have been either in the process of delisting their issued shares from the bourse or on the delisting watchlist of the Exchange. This was stated in the Exchange’s X-Compliance report.
The report, which is released by the Exchange every Friday and seen by Nairametrics, stated that the Regulation Committee of the National Council of The Exchange (RegCom) has approved for the Exchange to proceed with the delisting process of Evans Medical Plc, Tourist Company of Nigeria, Anino International Plc, Nigerian German Chemicals Plc, and Roads Nigeria Plc since last December.
On the other hand, Omatek Ventures and Deap Capital Management & Trust have been placed on the NSE’s delisting watch-list over their failure to comply with some post-listing requirements, including failure to file their quarterly and annual reports within a stipulated time.
Why companies delist
There are two main reasons why companies delist from the NSE or are forced to delist from the market. The first one entails punishment for companies that violate NSE’s listing rules.
The NSE periodically fines defaulting companies, whilst demanding that such companies address their corporate governance lapses. As Nairametrics reported recently, the latest X-Compliance report showed that the NSE made as much as N154 million by imposing fines on defaulting companies.
But sometimes, fines are not enough. The NSE is often forced to voluntarily delist companies whose infractions have become persistent.
On the other hand, a good number of companies have also voluntarily delisted from the NSE for various reasons, including the desire to become privately owned entities.
What you should know
In the case of Omatek Ventures, the company’s fate has been dwindling since the departure of its founder, Dr Florence Seriki. Nairametrics reported when it was accused of defaulting on its credit facility agreement with the Bank of Industry (BOI).
According to the development bank, the company has refused to service the N5.81 billion which it obtained in 2012. The bank disclosed that several measures had been employed to ensure that Omatek kept to the loan agreement, all to no avail. One of such efforts was the appointment of Ade Oyebanji as a receiver, who took inventory of all items located at Omatek’s premises at Plot 11, Kudirat Abiola Way, Oregun, Ikeja, Lagos, in January 2017.
Summary of the loan detail
In December 2012, the Bank of Industry loaned Omatek Ventures N5,808,429,033.95 in a term loan and working capital facilities agreement. The loan was disbursed to finance the procurement of assembly components for the production of laptops.
Also, as part of the requirements for obtaining the loan, the development finance bank said that it requested an Irrevocable Standing Payment Order arrangement with the defunct Skye Bank Plc in favour of BoI, all assets debenture, and an Irrevocable Personal Guarantee of the late Seriki.
Evans Medical Plc is a Nigerian pharmaceutical company that was established in 1954 and listed on the Nigerian Stock Exchange in 1979. Over the years, the company has been plagued by many challenges, ranging from increasing competition to corporate governance lapses. The latest NSE X-Compliance report indicated that the company has not submitted any quarterly financial statement from 2016 to 2019. At this rate, the NSE may have no choice but to forcefully delist the company.
Nigeria-German Chemicals Plc has also not been obeying the listing rules of the NSE. The latest NSE X-Compliance report also noted that the company had not filed any financial statement since Q3 2014 till date. It will not come as a surprise if the company is delisted from the Nigerian bourse any moment from now due to regulatory reasons.
Note that the company is a chemical/healthcare company which was incorporated in 1964. It was initially known as Nigerian Hoechst Plc before it rebranded and changed to its name in 1995. It was listed on the NSE in 1979.
Amino International Plc is also in the process of delisting, primarily because it abused NSE rules by not disclosing its quarterly financial statements from 2015 till date. The company, which engages in manufacturing different kinds of personal and industrial products, was incorporated in 1981 and listed on the NSE in 1990.
Roads Nigeria Plc is a civil engineering firm that is in the business of construction of roads, bridges, dams, airfields, and real estate. The company was incorporated in 1974 and is headquartered in the Northern Nigerian city of Sokoto.
Unfortunately, the company has not released its quarterly financial statements since 2014. This is a major violation of the NSE listing rules, which could result in the company being delisted soon.
The delisting of the Tourist Company of Nigeria Plc from the Nigerian Stock Exchange may be a voluntary move by the company’s owners. The company has recently been plagued by ownership tussles, with some shareholders calling for it to be liquidated. The hospitality company was incorporated in 1964.
DEAP Capital Management Trust Plc was incorporated in 2002 and listed on the NSE in 2007. Though Nairametrics had reported earlier that it was unclear whether its delisting was voluntary or regulatory with the recent X-Compliance report, it appears that the company is struggling financially as it has failed to turn in its quarterly reports to the Exchange.