United Capital To Raise ₦20 billion Unsecured Bond
United Capital Plc (UCAP) is seeking to raise 5-year and 7-year fixed rate senior unsecured Bonds of ₦10 billion each under its ₦30.0 billion debt issuance programme.
The leading financial service group says it plans to utilise the proceeds for operational and strategic investment in the company.
The proceeds, according to the firm, will be used to make anchor/underwrite investment grade fixed income instruments issued by entities advised by the Issuer.
In an email, Afrinvest explained that the investments will be within the issuer’s credit risk management framework and selectively supported by sovereign guarantees.
Based on its first quarter 2020 result, Afrinvest stated that the issuer currently has total assets of ₦197 billion.
Also, the investment group has over ₦150 billion in clients’ funds managed by its Asset Management subsidiary.
“UCAP has consistently shown a strong financial and operating track record with a return on equity of 25% and a net profit margin of 57.8% as at 2019”, Afrinvest stated in an email.
The firm had also raised ₦5.3 billion in a series 1 and 2 commercial Paper issuance, under its ₦20 billion programme registered with the FMDQ Securities Exchange, according to documented submitted on the Nigerian Stock Exchange in April.
First quarter financial review
In Q1 2020, the firm’s revenue increased significantly by 32% year on year, on the back of the company’s 55% increase in fee and commission income.
The firm’s gross earnings berthed at ₦1.919 billion in the first quarter (Q1) of 2020 as against ₦1.451 billion in Q1 2019.
The investment firm operating income rose to ₦1.89 billion, this represents a 40% increase when compare with ₦1.35 billion made in Q1 2019.
This record breaking performance features despite challenges in the economy amidst rising cases of coronavirus.
The company’s unaudited report showed that revenue revved up was supported by 223% increase in net interest margin.
This was in addition to a 149% growth in net trading income which grew to ₦79.416 million as against ₦31.903 million in Q1 2019.
Effective cost management impacted positively on its cost-to-Income ratio.
CIR improved significantly, recording 39% in Q1 2020 compared to the 47% recorded in the same period last year.
The management explained that this came as the Group continues to implement its cost containment measures.
At the bottom line, pre-tax profit margin stood at 61% on the back of revenue growth and sustained implementation of cost containment measures.
Also, profit after tax margin came strong. During the period under review, PAT margin stood at 52%.
The firm explained that after tax margin strengthened on the back of revenue growth and sustained implementation of cost containment measures.
Meanwhile, total assets grew by 31% year to date as a result of the 154% increase in cash and cash equivalent and 2% increase in Trade and other receivables.
Total liabilities of the firm increased by 35% owing to the growth in short term investment by 57.50%, trust funds by 79.17% and sinking funds by 92.25%.
In aggregate, the Group’s managed funds grew by 61%.
United capital noted that its shareholder’s wealth grew by 6% year to date on the back of the increased PAT leading to a 6% growth in retained earnings.
While commenting on the group’s performance the Group CEO, Mr. Peter Ashade, said: “Year 2020 has posed a lot of challenges to the Nigerian economy.
“We saw decline in oil prices- the operating environment was also impacted negatively,
“…With the exchange rate becoming more volatile, continued fall in rates in the money market as well as bearish sentiments in the capital market”.
According to the GCEO, said United Capital business was not immune to these challenges; however, the Group was able to endure the first quarter of the year.
“Thanks to our well-articulated and diligent implementation of our plans set out last year, we were able to deliver a 32% year on year increase in revenue and 53% increase in PBT.
“This increase was generated basically from our margin on investments and the 55% increase achieved on our Fees and commission income as well as a 149% growth in net trading income”, he said.
Ashade explained that United Capital investment income shrank this quarter due to the drop in returns in the money market.
“As we work into the coming quarters, we are constantly reviewing our strategy in light of the current global pandemic in the wake of COVID-19.
“As a Group, we were able to invoke our business continue framework which has worked immensely well over the past few weeks.
“We have been able to stay afloat with our work-force working remotely to ensure the continued operations of our business”, he highlighted.
United Capital boss said In line with the firm’s initial strategy for the 2020 business year, management shall continue to push further our market diversification and cost-optimization initiatives.
Ashade said, the firm will implement phased automation of its business processes whilst upholding commitment to ensuring a significant improvement in value delivery to all stakeholders.
Meanwhile, the investment company’s total assets expanded to ₦197. 409 billion year to date, from ₦150.464 billion.
Growth in managed funds lifted total liabilities from ₦130.878 billion to ₦176.691 billion in Q1 2020.
United Capital To Raise ₦20 billion Unsecured Bond