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Stock Market

Nestlé S.A. acquires additional shares in Nestlé Nigeria worth N2.92 billion

The Swiss multinational has acquired about 2.17 million additional shares in its Nigerian subsidiary worth N2.92 billion.

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Maggi Signature, Nestle Nigeria revenue climb 5% as profit hit N26.2 billion, Nestle Nigeria's Unaudited Financial Statements, Nestlé S. A. acquires additional shares in Nestlé Nigeria worth N2.92 billion, Switzerland based Nestlé S.A splashes N774 million to acquire shares of its Nigerian Subsidiary

Nestlé S.A, the parent company of Nestlé Nigeria Plc, with more than 66.5% ownership stake in its Nigerian subsidiary, has acquired about 2.17 million additional shares in the FMCG company.

This information was contained in a notification of share dealing by an insider, issued by the leading consumer goods company in compliance with the Nigerian Stock Exchange policy on insider dealing.

The notification revealed that Nestlé S.A, the Switzerland-based consumer goods behemoth increased its stake in Nestlé Nigeria, with the acquisition of a total of 2,166,647 additional shares of the FMCG company, at a price of N1349.00 per share.

This puts the total consideration for the shares purchased by the Swiss multinational at N2.92 billion.

Why this matters

  • Dealings by insiders of listed companies are corporate actions to be disclosed by the management of the company.
  • This is in compliance with NSE’s policy on insider dealing, as the disclosure is key in the effort to ensure transparency and reinforce the trust of the investing public.
  • The purchase of the shares of Nestle Nigeria further cements Nestle S.A’s position as the majority shareholder of the company, with an ownership stake of 66.5% (without taking the recent acquisition into consideration).

What you should know

  • Nestle S.A is the majority shareholder of Nestlé Nigeria Plc, with 527,080,970 units of the total issued shares of the company (December 31st, 2020).
  • According to a recent report, the Swiss multinational is set to earn a mega N32 billion in dividend from its Nigerian subsidiary, for the year ended December 2020.
  • Nestlé Nigeria shares at the close of trade today are presently valued at N1350 per share. The share price of the company is down -10.32% YTD.

Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor.

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Markets

SEC plans to monitor foreign stock brokers in Nigeria

SEC is proposing tighter and stricter regulatory oversight and requirements for foreign stockbrokers in the country.

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Nigerian Stocks snap 7-year losing streak to post first gain in August

In an attempt to reduce the demand for foreign stocks in Nigeria, the Securities and Exchange Commission (SEC) is proposing tighter and stricter regulatory oversight and requirements for foreign stockbrokers in the country.

In an interview monitored by Nairametrics, the executive commissioner for operations of the SEC, Dayo Obisan revealed the commission was planning to actively monitor the local facilitators of foreign stocks.

“At least 400,000 Nigerians have invested in foreign stocks through brokers in the past 18 months,” Obisan said, with Nigerians actively trading or holding foreign equities now exceeding those investing in the local market and about 70% of these participants being less than 40 years of age.

This is despite the Nigerian Stock Exchange being dubbed the best performing last year after it gained 50% YTD. Stocks are however down 5% YTD.

In contrast, the S&P 500 Index is currently trading 14.50% YTD, creating a new all-time high.

Also, the value of transactions is down YTD as demand shifts from the Nigerian stock exchange market to the Cryptocurrency and foreign stock market.

“There is an increasing interest among the younger population and this is of concern to the commission primarily because it creates an avenue for exploitation,” Obisan said.

The SEC intends to license firms offering foreign stocks under a “digital sub-broker” regulation, which Obisan says should provide a form of clarity to their activities.

He also stated the requirement will ensure “regulatory responsibilities in on-boarding clients, custody of assets, and compliance with reporting requirements are met”.

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Commodities

Lagos Commodities Exchange to start gold trading

The move is in support of the Federal Government’s effort to reduce dependence on oil, diversify the economy and boost the country’s foreign exchange earnings.

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Nigeria's first gold refinery to provide over 500,000 jobs

The Lagos Commodities and Futures Exchange has concluded plans to commence trading of gold with the admission of Dukia Gold’s diversified financial instruments, backed by gold as the underlying asset.

The move is in support of the Federal Government’s effort to reduce dependence on oil, diversify the economy and boost the country’s foreign exchange earnings.

Dukia Gold said the financial instruments, which would be in form of exchange-traded notes, commercial papers and other gold-backed securities would enable the company to deepen the commodities market in Nigeria, increase capacity, generate foreign exchange for the government to diversify external reserves and create jobs across the metal production value chain.

While making the disclosure, during a Pre-Listing media interactive session in Lagos on Thursday, the Chairman of Dukia Gold, Mr Tunde Fagbemi, applauded the Ministry of Mines and Steel Development and the Security and Exchange Commission (SEC) for supporting trading of gold in Nigeria.

What the Chairman of Dukia Gold is saying

He said, “We are proud to be the first gold company whose products would be listed on the Lagos Futures and Commodities Exchange. The listing shall enable us to facilitate our infrastructure development, expand capacity and create fungible products.

This has the potential to shore up Nigeria’s foreign reserve and create an alternative window for the preservation of pension funds. Gold-backed security is a hedge against inflation and convenient preservation of capital.”

Fagbemi pointed out that the company has refinery services to smelt metals with the capacity to meet local and international demand.

Going further, he said, “As a global player, we comply with the practices and procedures of London Bullion Market Association and many other international bodies. Our refinery will also have multiplier effects on the development of rural areas anywhere it is located.’’

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What you should know

It can be recalled that the Federal Government, in June 2020, commissioned the operations of Dukia Gold and Precious Metals Project (DGPMP). The project is expected to enable Nigeria to mine its gold reserves properly, trade responsibly and refine locally.

The Vice President, Prof. Yemi Osinbajo, while performing the virtual commissioning of the project, said Nigeria has potential reserves of 200 million ounces of gold reserves.

Osinbajo said that he believed that the Dukia gold project would encourage the emergence of smaller-scale mining companies which, for the first time, would have a transparent and welcoming market for their mined gold and precious metals.

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