FBNQuest, the investment banking and asset management arm of FBN Holdings Plc has urged private mid-cap companies to carefully explore the financing options available in the local financial markets.
Ijeoma Agboti, FBNQuest’s Managing Director of Funds, stated this during an interaction with financial journalists in Lagos.
According to Agboti, the current economic headwinds facing mid-cap businesses place a demand on business leaders to carefully plan their capital needs to ensure optimization and defensive positioning.
Importance of equity: She stressed the importance of equity and quasi-equity capital financing as a good source of funding for companies.
- “Equity and quasi-equity capital are important sources of financing for mid-cap companies seeking investment for their current operations and expansion initiatives. Equity capital can be helpful to businesses because business owners can sell shares to investors to finance expansion and growth, without immediate obligation.
- “Quasi-equity encompasses various loan and convertible loan options for which repayment is linked to future cash flows, but often provide more flexible payment terms than traditional loans,” she said.
Outlook for Nigeria: The interaction included a presentation by Tunde Abidoye, the Head of the Equity Research team at FBNQuest, on the prospects for Nigeria’s macroeconomy. He highlighted the outlook for public debt, the exchange rate, and inflation. He said:
- “Businesses and investors now face difficult conditions including mounting pressures on inflation and exchange rate, constrained disposable income as well growing pressure from the external sector.
- “Given the challenges on both the global and domestic fronts, it is essential for businesses and investors to have informed views on important macroeconomic variables in order to minimize business risks and to develop a long-term strategy to take advantage of opportunities as they arise.”
Overall, Ijeoma Agboti said that while the outlook for the business environment remains uncertain over the next 6 months, strong opportunities remain to bolster capital structures and to pursue strategic business prospects.
- “A difficult economic environment provides a good opportunity to re-strategize and position for recovery. In the process, investors should decipher attractive opportunities presented by quality issuers,” she said.