The year 2020 began with lots of predictions and promises, but the volatility in the stock market (which was occasioned by the Coronavirus pandemic) was not top on the list.
On February 27, Nigeria recorded the index case of the Coronavirus pandemic, an Italian who visited the country for business reasons. A month later, the federal government was preparing to announce a lockdown of the economy as part of measures to curb the seemingly unpredictable increase in the spread of the Coronavirus.
The lockdown which commenced 2 days after the announcement brought a lot of uncertainty into the financial markets, and this definitely comes with huge consequences for individual and corporate investors.
For many investors around the world, the first four months of the year was a bad one. There were fluctuations and sudden declines in stock prices. And for top Nigerian billionaires, it was definitely more of the losses than the gains. This article examines how they performed in the last two months, from February 29 after the index case was Q1 2020.
Alhaji Aliko Dangote
Being the richest man in Nigeria is no mean feat, yet Dangote has been able to maintain this title for years without breaking a sweat. However, the Coronavirus pandemic has taken a bite out of the billionaire’s billions.
By the end of February 2020, Dangote’s 14,500,315,501 direct shares in Dangote Cement Plc worth N2,465,053,635,170 at the share price of N170 per unit, while the 27,642,637 shares which he controls through Dangote Industries Limited were worth N4,699,248,290 at the same share price.
By implication, the total worth of his shareholding in Dangote Cement Plc as at February 29, 2020, was N 2,469,752,883,460—over N2.4 trillion.
(READ MORE: 10 fantastic things Aliko Dangote has done in the last 10 years)
The value slid downwards hitting N129.70 at the end of March, before rising slightly to N130 at April 30.
At this time, Dangote’s indirect shares were worth N3,593,542,810 while his direct shares were worth N1,885,041,015,130 summing up to N1,888,634,557,940 (over N1.8 trillion).
By comparing N 2,469,752,883,460, the value as at February 29, with N1,888,634,557,940 as at April 30, we can see that the billionaire’s assets in Dangote Cement Plc crashed by N 581,118,325,520 (N581 billion).
By any standards, this was no small loss.
Stock prices at Dangote sugar also suffered a similar fate. Starting at N14.00 per unit on January 1, the stock experienced fluctuations before closing the quarter at N10.00 per unit. Dangote’s 8,775,541,295 direct and indirect shares were valued to be worth N122,857,578,130.00 (N122.85 billion) at a share price of N14.00 on January 1.
Twelve weeks later, with the stock price down to N10.00 per unit, the worth of the same shares had dropped to N87,755,412,950.00 (N87.75 billion), a heartbreaking loss of N35,102,165,180.00 (N35.1 billion).
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Stock prices at Dangote sugar, however, took a different trend for this period, starting at N12.1 on February 29 and appreciating almost 3% to 12.45 at the end of April.
The billionaire directly owns 653,095,014 shares and indirectly owns 8,122,446,281 shares through the Dangote Industries Limited. Dangote’s 8.77 billion shares were valued to be worth N106,184,049,669.5 (N106.84 billion) at a share price of N12.1 on February 29.
Twelve weeks later, with the stock price up to N12.45 per unit, the worth of the same shares had increased to N109,255,489,122.75. This gain of about N3 billion was recorded during the pandemic period, and on surface value, it can be attributed to the food products which the company produces. People eat even during a crisis.
Adding up the figures with that of Dangote cement, one can see that the little gain of N3 billion cannot be compared to the loss of N581 billion, as the mogul still lost over half a trillion.
We have not made any calculations for NASCON, as there is no way to confirm the stocks Aliko Dangote has with the company since he is not listed on the board.
However, NASCON shares closed at N13 on February 29, and slid down to N10.05 on April 30, dropping by 23%.
Entrepreneur billionaire and Chairman of United Bank for Africa Plc, Tony Elumelu also had some losses during the two months in review.
TOE, as he is called, directly owns a total of 190,100,234 units of shares in the bank, and 2,114,110,884 units of indirect shareholding in the company. This brings his total shareholding to 2,304,211,118 units of shares. By the close of trading on February 29, UBA’s shares were worth N6.7, meaning Elumelu’s total stocks in the bank was worth N15,438,214,490.6 (N15.43 billion).
There was not much movement in the share values for UBA plc as it started N6.7 on February 29 and ended April at N6.05. This means that by April 30, Elumelu shares (multiplied by the share price of N6.05 per unit) were worth N13,940,477,263.9 (N13.94 billion), showing a loss of N1,497,737,226.7 (N1.49 billion). This loss was a 9.7% depreciation of his share value, but N1.49 billion was no small loss for TOE.
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The founder of Zenith Bank, Jim Ovia is one of Nigeria’s top billionaires. He directly owns 3,546,199,395 units and indirectly owns 1,513,137,010 units of shares. With over 5 billion units of direct and indirect shareholding in the bank, he is the biggest shareholder. Zenith Bank’s shares closed at N18.5 on February 29, danced a little way up and a little way down, before sliding continuously to close at N14.3 as at April 30.
As at February ending, Ovia’s total 5,059,336,405 units of shares were worth N93.59 billion (N93,597,723,492 at the share price of N18.5 per unit. By April 30, following the crash in prices, the worth of the same shares had dropped to N72,348,510,591.5 (N72.35 billion). Subtracting the latter value from the first, one can see that the worth of Jim Ovia’s stocks dropped by a whopping N21.2 billion (N21,249,212,901).
Among all the billionaires, Jim Ovia suffered the greatest percentage loss in the worth of his assets, 22.7%.
A heart-rending drop for him!
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Access Bank’s Group CEO, Herbert Wigwe had a total shareholding of 1,441,522,910 units as at December 2019, before selling off a total of 55,611,001 indirect shares in four transactions, all in January 2020.
The depletion of his indirect holding through Trust and Capital Limited left him with 1,385,902,910 total shares made up of 1,184,680,195.5 units indirect holding and 201 million (201,231,713) direct shares.
Share prices of Access bank closed at N8,2 on February 29 and dropped to N6.6 on April 30. His 1.39 billion shares were worth N 11,364,477,653.80 on February 29, and crashed by 19% to become N 9,147,018,599.40 on April 30.
Wigwe is N2.22 billion poorer because of the COVID-19 induced stock crisis.
Alhaji Abdulsamad Rabiu
According to the Cement Company of Northern Nigeria Plc (CCNN) 2018 financials, Abdulsamad Rabiu had 12,752,801,231 units of shares. However, CCNN has since then been merged with the Obu Cement to give birth to BUA Cement. Since the merger, the new entity BUA cement has not released any financial statement so there was no way to confirm what Rabiu’s stakes are in the company presently.
However, BUA cement had its stock close at N37.15 at the end of February 29, 2020. This value dropped by 12.25% over the weeks to hit N32.6 by 30 April.
By implication, whatever the number of shares the billionaire had with the company, the value has dropped by over 12% in the COVID-19 dominated weeks.
Note that the stocks started the year at N18.10, meaning that the billionaire has lost even much more than we have captured.
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Having dispensed of a few shares in 2019, co-founder of Seplat Austin Avuru ended the year with 58,970,463 indirect shares in the oil and gas company.
Avuru’s shares, when multiplied by the share price of N605 gives a naira value of N 35,677,130,115 as of February 29.
Taking it two months forward, a stock price of N494.4 as at April 30 shows that the value had depleted to N29,154,996,907.20
Avuru lost about N6.5 billion (N 6,522,133,207.80) to the stock price decline.
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Mike Adenuga is the Chairman of Conoil Nigeria Plc, and directly owns 516,298,603 units of shares. He also has 103,259,720 units of indirect shares through Conpetro Limited, making for about 74.4% of Conoil’s issued share capital.
Conoil’s stock prices started at N18 per unit and only dropped a little to close at N17.4 on April 30.
Multiplying Adenuga’s 103,259,720 indirect shares by the stock price of N18 gives us a naira value of N1.86 billion (N 1,858,674,960) as at February ending, but the slight decline in stock value reduced the worth of these shares to N1.79 billion (N1,796,719,128).
Adenuga lost N61.9 million (N61,955,832) in his indirect shares to the COVID-19 crisis.
The 516,298,603 direct shares fell from N9.29 billion (N9,293,374,854) to N8.9 billion (N8,983,595,692.2) by end of April—a difference of N309 million.
From these figures, we can see that Adenuga’s had a loss of N371 million (N371,734,993) within the period under review.
Table of losses
Understanding the trend
A lot of factors affect the stability or otherwise of a company’s stock price and one of them is the volume of shares being traded.
A Council member, Nigerian Stock Exchange, Adebayo Ajayi, explained that the more shares owned by an individual investor, the fewer number of shares being traded and the more stable the price can be.
Investors often rush to sell when they sense uncertainty in the market. This results in a larger volume of shares being traded and directly impacts share values.
According to Ajayi, the stocks in Dangote group of companies, for instance, float more as the billionaire has gradually let in more investors over the years.
Note: The stock figures used in the analysis above was sourced from the Nigerian Stock Exchange (NSE) website, using the most recent figures from the companies’ financials.
Let my apologize in advance for my rather long comment, that is what you get when we have a a lot of time….
Those are all paper losses which don’t mean a lot to these billionaires who are rarely selling their stocks to finance their lifestyle except ofcourse their egos especially when such assets are valued in USD to determine their ranking in the privileged billionaire list. Leave it long enough and those stocks will climb up again and surpass their original values. However, the real losses for these billionaires is in the value of the naira which continues to depreciate following the CBN’s devaluation last month. These billionaires like many wealthy people have lost significant dollar values of their assets (still paper value) but more importantly a lower purchasing power of their income and realized capital gains in the international market. For instance if they were to pay for items abroad or imported items they will have to come up with more naira now than in February therein lies the loss for them and much more for the middle class who were merely getting by before the pandemic. Cost of imported food items, household appliances, school fees and living expenses for any child abroad, automobiles etc would have all risen significantly due to the lost value of the naira. We should pursue a strong make in Nigeria agenda using heavy tariffs to discourage importation and lessening tax burdens on local manufacturers. This will perform two goals lessen the impact of currency devaluation on Nigerians and secondly, ensure there is less need for fx to buy foreign goods and services therefore preserving the value of the naira. Until then…..