FX Reforms Improve Valuation Transparency, Foreign Investment—Issuing Houses
The Association of Issuing Houses of Nigeria (AIHN) says reforms in the foreign exchange (FX) market have significantly improved valuation transparency in companies and increased foreign investment in the economy.
AIHN’s President, Ms. Kemi Awodein, said this at the association’s Annual General Meeting (AGM) in Lagos.
Awodein explained that the several successful transactions facilitated within the year were boosted by the forex reforms.
These, she mentioned, included Heineken’s 24 billion dollar acquisition of a controlling stake in Nigerian Breweries and Sahara Group’s one billion dollar purchase of Egbin Power.
“These deals were facilitated by the restructuring of the FX market, which improved valuation transparency for foreign investors,” she said.
According to her, the ongoing recapitalisation of banks has also supported growth in the equities market, which is a good development for the economy.
She said that in 2023, the Nigerian investment banking sector’s significant developments were influenced by key economic reforms, particularly the removal of fuel subsidies and the unification of the exchange rate.
Awodein explained that these reforms had a profound impact on the overall financial landscape, enhancing foreign investors’ confidence and increasing liquidity in the market.
She noted that the reforms, alongside broader macroeconomic adjustments, shaped investment banking strategies, enabling new opportunities in capital raising, mergers, and acquisition activities.
“The prominent transactions are Seplat Energy’s 650 million dollar bond issuance, aimed at expanding its energy operations, and Airtel Africa’s 500 million dollar capital raise, which was used to enhance telecommunications infrastructure.
“These initiatives were made more feasible by the improved economic environment following the reforms,” she added.
The financial expert said that improvements in transaction processing and time-to-market cannot be overemphasised and represent positive developments in the market.
The AIHN president added that foreign portfolio investors were focused on the currently elevated effective yields on Treasury bills and commercial paper at the expense of locking in returns on government bonds for a more extended period.
She stated that in the first half of this year, the Nigeria Exchange Ltd.’s (NGX’s) All-Share Index (ASI) recorded an impressive return of 33.8 percent, materially outperforming its African peers.
“(Ghana Stock Exchange:+22.3 percent, Nairobi Exchange: +18.9 percent, Uganda Stock Exchange: 17.9 percent; to mention a few).
“The market’s bullish run was buoyed by a confluence of factors, including robust corporate earnings, dividend declarations, and heightened interest from both domestic and foreign investors.
“Noteworthy are the listing of the Nigeria Infrastructure Debt Fund and Transpower, which significantly boosted market capitalisation on NGX positive market sentiment and was recorded across respective sectoral indices in first half of 2024,” she said.
Awodein also said that in the second half of 2024, the anticipated drivers of the equities market were banking sector recapitalisation activities, completion of the Dangote Refinery, corporate actions, and the potential return of foreign portfolio investors (FPIs).
She stated that the banking recapitalisation has invariably created an opportunity for the growth of real investment and a deeper capital market.
“I look forward to furthering our discussions with other strategic market stakeholders, such as the Central Bank of Nigeria, the Nigerian Exchange Limited, NASD Plc, Central Securities Clearing System, and FMDQ Plc, alongside other capital market trade groups.
“I am confident that constructive engagements will result in an upsurge in issuer interest and ultimately contribute to the deepening of the Nigerian capital market,” she said.
Meanwhile, the AGM provided an opportunity for the AIHN executives and members to receive the association’s audited financial statements for the year ended Dec. 31, 2023.
This was done alongside reports of directors and auditors, re-appointment of auditors, authorisation of directors to fix renumeration of auditors, and election of Taiwo Olatunji as the Secretary of Treasury.
The account statement showed the association recorded N86.56 million in income in 2023 financial year, an improvement from N85.41 million it achieved in the corresponding year in 2022.
AIHN executive members present at the meeting were Dr. Gbadebo Adenrele, Vice President; Alhassan Gwarzo, Secretary of Finance; Abimbola Kasim, former Secretary of Treasury; Mrs. Onyebuchim Obiyemi, Secretary of Administration; and Chidi Iwuchukwu, Secretary of Publicity. #FX Reforms Improve Valuation Transparency, Foreign Investment—Issuing Houses#
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