The Nigerian Exchange Group has said that it will be adopting technology to drive the capital-raising efforts of financial companies who are racing to meet the new capital requirements of the Central Bank of Nigeria.
The Group Managing Director/Chief Executive Officer of the NGX Group, Temi Popoola, revealed this on Monday, when the Minister of Industry, and Trade & Investment, Dr Doris Uzoka-Anite, visited the NGX headquarters in Lagos.
Uzoka-Anite went to the exchange after paying a visit to Nigerian Breweries Plc, which days earlier announced that it was temporarily closing operations at two out of its nine breweries due to economic headwinds.
Popoola, who called for intentionality on the part of the government in terms of policies affecting the capital market, said the bank recapitalisation exercise would provide a unique opportunity for the market.
He said, “In our capital market, we will find different times and different eras when government interventions brought change. One such is this; the central bank has brought this capital recapitalisation for banks and in our minds, it is one of the unique opportunities to make a real, lasting impact.
“We are planning for these transactions to be more digital. Secondly, to be ones that get to the heart of our country, financial inclusion, retail investors. So, we are planning that as a result of this capital raise, the exchange through technology can help deepen the market.”
The NGX Group boss added that it will provide an opportunity for foreign investors to return to the market.
“Based on the numbers floating around, even if it is N3tn that would be raised by these banks over the next two years, that is a lot of capital vis-à-vis their sector. Looking at the market cap of that sector, that N3tn is quite material. And that N3tn has the potential to just catalyse the capital market again. If we get those transactions right, it is probably an opportunity for foreign capital to come back into the market.
“To add some context, whenever there is a primary market transaction, liquidity tends to show up. We are of the view that liquidity will show up when these banks come to the market. Where would that liquidity come from? It could be retail; it could be local institution investors, foreign investors or family offices.”
According to Popoola, the market is ready for the capital raise.
“20 years ago, when we had the bulls of the market before things burst in 2007/2008 and then the market lost quite some money at the time, we can confidently say that the market is in a much better place today,” he stated.
He pointed out the NGX group was not doing it alone but with the help of the regulator, the Securities and Exchange Commission.
“For us to get this across the line effectively, there is a lot of collaboration with stakeholders and the regulators. The SEC is taking a very strong lead in this regard.
“I spent all of Friday with the DG and commissioners. The regulator is taking a very strong leadership to say that this exercise must be successful and be done in a way that will account for the lessons that we have learnt from the past,” he said.
Meanwhile, a source at the SEC told The According that the regulator was ready for any scenario that may arise from the capital raising exercise.
“The commission is prepared as a regulator to weather every challenge or increased activity that may arise from the planned recapitalisation by the banks.
“The relevant departments that coordinated recapitalisation or fundraising in the past are very much ready to take on upcoming recapitalisation exercise. The commission has a procedural manual that guides its activities including those for recapitalisation of banks. This is the much I can say on this issue,” he stated.
Most of the banking groups that had indicated interest in raising capital said that they would be exploring both the local and international capital markets.
