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Exclusives

Exclusive: I put up my house as collateral to save HealthPlus – Bukky George

Bukky George sits with Nairametrics to discuss the crisis that has rocked HealthPlus Limited.

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HealthPlus: More facts emerge as Bukky George reveals she owns 48.9%

The founder and ‘CEO’ of HealthPlus Ltd, Mrs. Bukky George, revealed she put up her house as collateral to help fund operations of the company she founded in 1999. She revealed this to Nairametrics, in an exclusive interview granted to our Analyst, at Southern Sun, Ikoyi, Lagos.

The Nairametrics’ Lead Analyst sat with Mrs. George, to get a first-hand account of her side of the story, that has pit Private Equity investors from the UK, against the Founder of a business seeking cash to expand their operations.

READ: Meet Bukky George, The CEO of HealthPlus who just raised $18 million

Nairametrics asked a range of questions, some of which she preferred not to respond to as the matter was still in court. However, in one of the remarks, she confirmed that she had to put up her house as collateral, to get funding from a financial institution. She also implied that the Private Equity firm’s modus operandi was to starve her company of funds, so they can watch the business falter, allowing them to buy on the cheap.

“When the funds stopped coming, I had to put my house as collateral, and my personal guarantee is also collateral too. Apart from the money they invested, they don’t have much to lose, but I have everything to lose. When the funding never came, I invested my life savings.”

She emphasized that the modus operandi of some of these investors is, “They come, they pledge, give you some money, and stop. When the business dies, they buy at peanut.”

READ: Just in: FG bars Air France, KLM and other foreign airlines

According to Mrs. George, the failure of the private equity firm, Alta Semper, to disburse the balance of the $18 million, hampered the operations of a once-thriving business. They paid less than half of the total sum.

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“The agreement is to fund our operations without delay. The objectives are the premise of the balance funds. However, 18 months on, the balance is still outstanding. We could not meet our target, because more than half of the funds has not been released to us. We were doing well in the first year of the deal, but the DNA changed after 1 year,” she said.

She also hammered on how Alta Semper starved them of working capital, resulting in their inability to stock their shelves with drugs. Saying, “We had board meetings, they are the financial gurus. They saw the working capital and our cash flow and made no comment. I would not fight if I am not sure of winning the case. They were watching us dwindle. We needed to buy drugs on our shelves, but we couldn’t get the fund. We spoke every week, but they kept promising that they will fund me in two weeks. Our agreement indicates that we were joined at the hips, that is, they can’t make decisions without my consent and vice verse.”

READ: HealthPlus: More facts emerge as Bukky George reveals she owns 48.9%

Mrs. George insisted that the technical agreement she had signed with Alta Semper, required that they perform certain obligations, which they have failed to fulfill, leading to her decision to go to court.

“We signed a technical agreement, they had obligations but failed to achieve one. I can’t go into details, because we are in court. When I put it down in writing, they compelled me to retract it. When I complained about what is not going right, they stayed mute. I had no choice but to go to court,” she stated.

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She also provided her own view of why the other two directors, former Chairman, Dr. Ayo Salami, and Mr. Deji Akinyanju had resigned from the board.

READ: NCR to leverage MSMEs lending by over N1.23 trillion

Saying, “The Chairman resigned last week Thursday, another Director resigned 5 weeks ago (that is my nominee Director). A day after the Chairman resigned, they swooped in when we didn’t have a constituted board. They had asked the banks to hijack our account, but they denied it, requesting board resolution, and approved minutes for the meeting. They have not been able to provide that.”

Mrs. George also claimed that the employees of HealthPlus were on her side because she is a ‘good boss’, which is why they avoided meeting with representatives of Alta Semper.

“When they called staff for a meeting on Friday, everybody ignored the call. They tried a zoom meeting, everyone ignored it. If I am not a good boss, don’t you think they would have rushed to the meeting?” she asked.

Nairametrics maintains a neutral stance in this matter. We have also reached out to the representatives of Alta Semper to get their own side of the story. We will keep you updated, as it unfolds in the coming days.

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Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

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Blurb

Is something fishy going on at Custodian Plc?

Custodian stock hit a year high just as it announced a Convertible Loan Instrument set to be approved at its AGM.

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Custodian Investment Plc. announces board meeting and closed period, Custodian Investment Plc. announces board meeting and closed period

Custodian Plc, one of the largest insurance companies in Nigeria is currently trading at a new year high of N7.10 and is up 21% year to date. Nairametrics Blurb team has in recent days noticed an upsurge in its share price especially since the company announced its AGM.

As we pen this article, about 2.9 million units have exchanged hand at a share price of N7.

The stock is included in the Pension Index and by some measure quite illiquid. It is also one of the stocks recommended in our Premium Service Stock Select Newsletter thus the need for further introspection.

READ: Buy what? GTBank vs Zenith Bank

Custodian Investment AGM

Typically, when companies announce AGMs we are keenly curious as this is where decisions that can ultimately affect shareholders (especially smaller retail investors) are approved.

In its recent filings, the company stated as follows in item 10.

That the Board of Directors of the Company be and is hereby authorised to:

(a) raise the Naira equivalent of up to $15,000,000.00 (Fifteen Million US Dollars), as additional capital through a convertible loan instrument;

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(b) convert the loan in the Naira equivalent of up to $15,000,000.00 (Fifteen Million US Dollars) into shares in the Company (the “Conversion Shares”) at a conversion price, being the higher of N6 per share or the 12-month historical average daily share price of the Company derived from the Daily Official List of The Nigerian Stock Exchange (for the period ending on March 23, 2021), subject to adjustment upon the occurrence of certain adjustment events;

(c) allot the Converted Shares to the Lender upon the exercise by the Lender of its right to convert the Loan into shares in the Company, subject to applicable law; and

(d) take steps necessary or reasonably desirable to give effect to the foregoing resolutions and for effecting any transactions pursuant thereto, including the appointment of professional advisers, and the obtention of relevant regulatory approvals.

READ: Notore Chemicals is swimming in debts – company to access equity market in Q2 2021

What this means?

In simple English, the directors of Custodian are seeking the approval of its shareholders to borrow $15 million (N6.1 billion) in convertible loan instrument.

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A convertible loan instrument is simply a loan that you can convert into shares if the lender so wishes. The share price for conversion are predetermined and in this case, they stated N6 per share or the 12-month historical average daily share price of the company’s stock.

If the lender does decide to convert the loans to shares at the current share price of N6 per share, it means about 1 billion shares will be offered to the lender, an equivalent of 17.4% of the total outstanding shares of the company. This loan is in effect, a potential dilution of existing shareholders of the company if it is approved at the AGM.

So why is the company seeking a convertible loan or even diluting its shareholders?

READ: Gains on quoted investment stocks rescued Custodian Investment Plc from loss in Q3 2020

Fishing around for why

Typically when a company decides to raise money via a convertible loan instrument, they are looking for lower interest rates, debt that avoids the burden of periodic repayment, and/or looking to delay when the actual equity is issued. There are also tax considerations at play but not as significant as the ones mentioned above.

Except, Custodian is looking to purchase another asset, after it bought UPDC, we do not understand why it will be looking to raise capital huge enough to dilute existing shareholders. It also did not explain why it is seeking to raise the said capital in its AGM Notice, a slight departure from the norm in cases like this.

  • Custodian is also highly capitalized with a Net Asset of about N46 billion and a balance sheet size of N176.1 billion (after the acquisition of UPDC) as of 2020.
  • Suffice to add that the company recently paid shareholders about N2.6 billion in dividends, making us wonder why it is seeking to dilute shareholders when it could have just ploughed that amount to its capital raising needs.
  • In fact, the dividends paid in 2020 was just 21% of profits, meaning it had retained about N10 billion in profits made during the year. Again, why does it need N6.1 billion in loans?
  • Custodian also has a thriving insurance business which fetched it about N58 billion in gross premium income out of which N32 billion was from non-life. Again, why does it need N6.1 billion on convertible loans?
  • The company currently carries a debt of about N5.5 billion which was inherited from its acquisition of UPDC. The debt is mostly a bond issued at an interest rate of 16% per annum and due for full liquidation in 2023.
  • There is no rush to pay down this debt.

READ: NPF Microfinance vs C&I Leasing: A tale of two rights offer

What then?

We are lost as to why the company is looking to raise this capital and can only now think of two reasons. Firstly, could it be the existing shareholders looking to tighten their stake in the company? Custodian’s majority shareholders are Gratitude Capital Limited and Mikeade Investments Limited with 22.48% and 15.72% respectively.

  • The company CEO Oluwole Oshin represents Gratitude Capital while Business Mogul Micheal Ade (Elizade) owns Mikeade Investments Limited. Could it be either of these two investors looking to up their stakes?
  • There could also be a reason for this back door approach. About 74.5% of the company is owned by just 20 shareholders so it is clear that increasing majority stake will be difficult to achieve.
  • The other reason is perhaps an institutional investor looking to acquire a significant stake in the company through the backdoor. Is this plausible?

READ: Investors react to Fidelity’s bond listing, as it gains N1.74 billion

Well, these are speculations that only Cusdotian can confirm. We hope they do so as soon as possible.

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Exclusives

EXCLUSIVE: Best performing banks in Nigeria judging by the numbers

Nairametrics analysed the best banks in Nigeria based on their performance in 2020.

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Nigerian banks, Banks with the Highest Social Media Followers

The year 2020 was a remarkable year for the Nigerian banking industry as different policies such as the GSI policy, loan restructuring, etc., were issued in the industry’s favour. The industry became more competitive in the year, with each of the banks striving to increase its market size and revenue.

Tracking the public information of listed banks on the NSE, we analysed them based on popular metrics to determine the leading players in the industry. For the analysis, the full year 2020 results of the following banks were tracked: Access, FBN, FCMB, Fidelity, GTB, Jaiz, Stanbic IBTC, Sterling, Union, UBA, Wema, and Zenith Bank. Ecobank was not considered in the analysis as the bank operates efficiently in other markets besides Nigeria.

The key metrics considered in these analyses are Total Assets, Net Assets, Total Deposits, Profit After Tax, Return on Equity, and Return on Total Assets.

READ: Banks spend N12.2 billion on travel expenses in 2020

Leading Banks by Total Assets

An analysis of the combined assets of the 12 listed banks that have released their full-year (2020) results (Ecobank excluded) showed that the total assets increased by 27.9% from N38.7 trillion to N49.4 trillion. The increase indicates the stronger financial position of the banks.

Among the 12 banks listed in Nairametrics tracker, the following are the leading banks.

First position – Access Bank: N8.7 trillion
Second position – Zenith Bank: N8.5 trillion
Third position – UBA: N7.7 trillion
Fourth position – FBN Holdings: N7.7 trillion
Fifth Position – GTB: N4.9 trillion

Upshots – Access Bank and Zenith Bank maintained their positions as the banks with the highest total asset in 2020. UBA however, overlooked FBN to stand in the third position, while FBN declined to fourth on the list. Among the leading banks (FUGAZ), UBA had the highest year-on-year growth of 36.95% in 2020, while in the industry generally, Jaiz bank had the highest growth in total assets of 39.3%.

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Net Assets

The net asset represents the remainder when all liabilities have been subtracted from the bank’s total asset. It indicates the shareholders’ funds in the banks. Due to the depository nature of commercial banks and the ability of banks to greatly increase their liabilities, the metric is adopted by the CBN in assessing the banking sector’s ability to withstand credit losses.

The combined net asset of our 12 analysed banks increased by 17.9% in 2020 with the largest growth of 25.3% coming from Stanbic IBTC.
The leading banks based on net assets are:

First Position – Zenith Bank: N1.1 trillion
Second Position – Guaranty Trust Bank: N814.4 billion
Third Position – FBN Holdings: N765.2 billion
Fourth Position – Access Bank: N751.0 billion
Fifth Position – UBA: N724.1 billion

Upshots: It is observed that all the banks had significant increases in their net asset in 2020 while the top ones also maintained their positions. However, Union Bank and Wema Bank recorded the least growth in net assets with a 4.75% and 5.9% increase respectively. Zenith Bank’s net asset grew by 18.6%, Guaranty Trust Bank by 18.5%, FBNH by 15.7%, Access bank by 23.8%, and UBA by 21.1%.


Customer Deposits

Customer deposits remain one of the most competitive items in the banking sector since it is from deposits that loans are issued out and other investments are made.

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The total customer deposits of the tracked banks increased by 32.1% in 2020. The bank with the highest growth in customer deposits during the period was UBA growing by 48.1%, from N3.8 trillion at the end of 2019 to N5.7 trillion as of April 31st, 2021.

The leading banks based on Customer Deposits are:

First Position – UBA: N5.7 trillion
Second Position – Access Bank: N5.6 trillion
Third Position – Zenith Bank: N5.3 trillion
Fourth Position – FBN Holdings: N4.9 trillion
Fifth Position – GTB: N3.5 trillion

Upshots: UBA grew significantly in 2020, moving from fourth place in 2019 to the bank with the highest customer deposits at the end of 2020. Generally, all the banks recorded customer deposits growth higher than 20% in 2020 with the exemption of Jaiz bank and sterling bank which grew by 7.2% and 6.5% respectively.


Profits After Tax

Due to the increased capacity seen in the growth of total assets of the banks, the banks under our radar delivered improved PAT except for Fidelity, and Wema Bank.

Banks that declared the most profits are;

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First Position – Zenith Bank: N230.6 billion
Second Position – Guaranty Trust Bank: N201.4 billion
Third Position – UBA: N113.7 billion
Fourth Position – Access bank: N106 billion
Fifth Position – Stanbic IBTC: N83.2 billion

Upshots: Zenith Bank and GTB outperformed their peers as done in previous years. Also, UBA again outgrew its 4th position in 2019 moving up the ladder to the third position at the end of 2020. However, in terms of growth in PAT, UBA also grew highest by 27.7% in the period under review.


Return on Equity

The return on equity is an important metric that shows the percentage of profit made on every N1 of the shareholders’ fund. It is used to measure the performance and efficiency of the banks.

This metric will show how well banks have maximised the increase in shareholders’ wealth they enjoyed in 2020.

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The leading banks based on ROE are

First Position – Guaranty Trust Bank: 26.8%
Second Position – Stanbic IBTC Holdings: 24.4%
Third Position – Zenith Bank: N22.4%
Fourth Position – Jaiz Bank: N17.4%
Fifth Position – UBA: 17.21%

Upshots- Sequel to the increase in total assets and PAT of GTB, the bank was able to achieve the greatest efficiency in the industry delivering a return rate of 26.8% to its shareholders.


Return on Assets

This metric measures the ability of a bank to sweat its assets and deliver the highest possible profits. In the earlier section of the report, we stated that banks recorded significant increase in their assets, however, the ROA was lower. The ROA is a better measure of efficiency since it takes into cognition the bank’s usage of customer’s deposits.

Best banks based on ROA are:

First Position – Guaranty Trust Bank: 4.6%
Second Position – Stanbic IBTC Holdings: 3.8%
Third Position – Zenith Bank: 3.1%
Fourth Position – UBA: 1.7%
Fifth Position – Jaiz Bank: 1.5%

Upshots: A similar result is seen in ROA just as seen in ROE. The average industry ROA was 2.05% and Access (1.3%), FBN (1.1%), FCMB (1.1%), Fidelity Bank (1.2%), Sterling bank (0.9%), Union bank (1.2%) and Wema bank (0.6%) all performed below the industry average.

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