The shares of the MTN Group dropped as much as 23 per cent to a nine-year low, yesterday, a day after the Central Bank of Nigeria (CBN) ordered the telecoms firm to repatriate $8.1 billion alleged to have been sent abroad illegally.
The News Agency of Nigeria (NAN) reports that at trading on the Johannesburg Stock Exchange, MTN shares were down 21.4 per cent at 84.35 rand, after touching 83 rand, a level last seen in 2009.
The CBN’s demand is the latest setback for MTN Nigeria, the South African group’s most lucrative but increasingly also its most problematic market.
It comes two years after MTN, Africa’s biggest telecoms company, agreed to pay a fine of more than $1 billion for allowing the use of millions of improperly unregistered SIM cards on its network.
But in a statement, MTN Nigeria refuted the CBN’s claim in strong terms.
Signed by its public relations manager, Funso Aina, MTN said it received a letter on August 29 from the CBN alleging that the Certificate of Capital Importation (CCI) issued in respect of the conversion of shareholders’ loans in MTN Nigeria to preference shares in 2007 had been improperly issued, and that consequently, the historic dividends repatriated by the telecommunications firm between 2007 and 2015 amounting to $8.1 billion needed to be refunded to the apex bank.
It claimed no dividends have been declared or paid by the Nigerian arm other than pursuant to CCIs issued by its bankers with the approval of the CBN as required by law.
He explained that the issue surrounding the CCIs has already been the subject of a thorough enquiry by the Senate of Nigeria.
According to him, “in September 2016, the Senate mandated the Committee on Banking, Insurance and other Financial Institutions to carry out a holistic investigation on compliance with the foreign exchange (monitoring and miscellaneous) act by MTN Nigeria and others.
In its report issued in November 2017, the findings evidenced that MTN Nigeria did not collude to contravene the foreign exchange laws and there were no negative recommendations made against MTN Nigeria.”
Aina said MTN Nigeria, as a law-abiding body, is committed to good governance and to abiding by the extant laws of the Federal Republic of Nigeria.
Promising to “engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available,” MTN, however, added: “The re-emergence of these issues is regrettable, as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy.”
This concern was re-echoed by Greg Davies of boutique investment house, Cratos Capital, in Johannesburg, who noted: “You just can’t do business in an environment where these type of things are going to happen.”
The CBN’s director of corporate communications, Isaac Okorafor, said on Tuesday that investigations specifically revealed that $3.45 billion was allegedly repatriated by Standard Chartered Bank on the basis of illegally issued CCIs.
Similarly, “$2.63 billion, $1.76 billion and $348.9 million were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc between 2007 and 2015.”
Okorafor said the investigations by the CBN in March 2018 became necessary, following allegations of remittances of foreign exchange with irregular CCIs issued on behalf of some offshore investors of MTN Nigeria.
Already, the CBN has ordered the managements of the four banks and MTN Nigeria to immediately refund the $8.1 billion allegedly repatriated by the company to the coffers of the apex bank.
Figures obtained from the CBN yesterday showed that the highest fine of N2.47 billion was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria got N1.88 billion. Citibank Nigeria is to pay N1.26 billion and Diamond Bank N250 million.
The CBN investigation further revealed that on account of the illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) worth $399.5million, the company illegally repatriated $8.13 billion.
Okorafor said the investigations were thorough and allowed all the parties a fair hearing. He advised banks and multinational companies in Nigeria to adhere strictly to extant regulations in their foreign exchange transactions.
Asked to react, Citibank’s head of media, Lola Oyeka, said she could not speak on the matter.
She, however, noted that if the bank had a statement, it would be made available.
Standard Chartered Bank Nigeria, in a statement, said: “While we cannot provide additional information due to ongoing engagement with the regulators, we look forward to a rapid resolution and satisfactory outcome of this matter.”
The heads of media of the remaining banks could not be reached for comments.
Meanwhile, the fine levied on the banks has pushed the stock market to a N100 billion plunge.
At the close of transactions, yesterday, the banking sector of the Nigerian Stock Exchange (NSE) witnessed free fall in share prices, as 10 banking stocks, including those of Diamond and Stanbic IBTC recorded price depreciation, reversing the gradual recovery recorded in the sector at the re-opening of trading on Monday.
Operators told The Guardian the development was having a multiplier effect on the market, which is largely driven by activities in the banking sector.
Findings also revealed that a lot of investors who gave mandate for the purchase of banking stocks suddenly issued counter-directives, following the pronouncement, apparently fearing they may lose their investment.
The all-share index depreciated by 272.27 absolute points, representing a decline of 0.77 per cent.
It closed at 35,086.67 points from 35, 358.94 recorded on Wednesday.
The market capitalisation went down by N100 billion from N12,909 trillion, closing at N12,809 trillion.
Diamond Bank, which appreciated by N0.09 kobo, to close at N1.39 kobo on Wednesday, lost N0.13 kobo to close at N1.26 kobo yesterday due to investors’ apathy to the stock.
Stanbic IBTC lost N1.25 kobo to close at N47.25 kobo, from N48.50 kobo at which it opened for transactions yesterday.
The Managing Director of Highcap Securities, Imafidon Adonri, said: “The banking index declined yesterday.
Previously, we saw some recoveries in the sector. But today (Thursday), the information has eroded investors’ confidence in the sector.”
He admitted it was appropriate to sanction banks that contravene CBN rules on transactions but expressed fear that the huge fine might impact negatively on the banks’ balance sheet.
“My fear is that the sanction appears to be severe. The punishment is capable of destroying the banks.
If there is a way the CBN can reduce the sanction, it will be welcomed.
“It is the people that committed the offence, not the bank. The severity of the sanction is not in order.
If anything happens to the banking sector, it sends a lot of panic to the market.” (GuardianNG)
The Egyptian Exchange to witness 3 private offerings in 2019
Head of the Egyptian Stock Exchange Mohamed Farid – File Photo
CAIRO – 18 March 2019: The Egyptian Exchange (EGX) will witness three big offerings this year, including two listings worth LE 14 billion, Chairman of EGX Mohamed Farid said.
Farid added during his speech at the American Chamber (AmCham) that three private firms expressed their desire to enter the market, noting that the procedures of the offering have started.
He noted that the market value of the first company reaches LE 8 billion and the second one hits LE 6 billion, while the third one is still under evaluation.
About the timing of the offerings, he clarified at Egypt’s real estate industry conference that one of them will finish the procedures of the listing during the first half of 2019, and the other two will be floated in September or November 2019.
Farid stressed on Monday morning that offering the shares of a number of public companies on EGX is important to revive the market.
Farid added that the delay of listing the shares is not related to the bourse but to the companies themselves and their vision about the timing and the importance of the offering to reflect positively on them.
The chairman of EGX hoped for the completion of the companies’ offerings in different sectors on EGX.
By the end of February, Egypt floated a stake of Eastern Company on EGX, and the public and private offerings on the bourse were completed Wednesday, March 6, with a total value of LE 1.72 billion.
– EGYPT TODAY
FBN Holdings targets foreign stock market
Mr Urum Kalu Eke, Group Managing Director, FBN Holdings Plc, on Friday said that the group would seek listing in foreign markets where it operates at the appropriate time.
Eke said at a news conference to mark 125th anniversary of First Bank Nigeria Limited in Lagos that the company would liaise with investors and regulators at the right time when opportunities arise.
He said that FBN Holdings would seek foreign listing when the time was right and regulation was also conducive, but would maintain headquarters in Nigeria in line with the vision of the founding fathers.
“These are bold statements aligning with the vision of the founding fathers, in the course of time, we will evaluate opportunities even as we work with the regulators, as we work with investors, with a view that we will continue to maintain headquarters in Nigeria.
“We will spread our network when the time is right and regulation is also conducive, we will be able to make a statement about listing in those foreign markets,” Eke said.
He explained that listing was not something you do without a deliberate plan.
“At the time, the founding fathers set up First Bank in 1894, they have a view of a pan African institution with headquarters in Nigeria with presence across the globe.
“That is why few years after 1894, by 1896 we were in Accra and two years after we were in Sierra Leone, today we have expanded the scope of our coverage, we are in six African countries. We are in Asia and we are in Europe,” he stated.
The News Agency of Nigeria (NAN) reports that FBN Holdings, currently listed only on the Nigerian Stock Exchange, is the non-operating financial holding company of one of the largest banking and financial services organisations in Africa.
He, however, said that the company was very proud of the achievements of its flagship subsidiary, First Bank of Nigeria Limited.
“We are proud at FBN Holdings of the achievements of our flagship First Bank of Nigeria Limited over the last 125 years, and that makes us at the holding company level the premier and of course the largest financial services group in Nigeria today,” Eke said.
He said that the group played active role in merchant banking and asset management sector as well as in insurance space.
“Just as we celebrating the commercial bank we can list a whole lot of achievements that have been recorded by the merchant bank through FBN Quest group and also the insurance.
“Today, the insurance company is the fastest growing insurance company in Nigeria and we are proud of what they are doing,” he added.
Eke noted that insurance had very low penetration in Nigeria with less than one per cent against 15 per cent penetration in South Africa.
“Talking about the life insurance business, it’s not just about taking insurance to the cities, we are also present across the country, wherever you find First Bank, we have a life insurance staff embedded in those branches
“We are saying we can play a very dominant role in championing insurance deepening in Nigeria, the same thing you can say about our FBN Quest group,” Eke said.
He said that the company had supported the Federal Government and sub-Nationals to raise bonds and capital for infrastructure development.
The group managing director said that through the pedigree of its franchise, it enabled government to raise N200 billion Sukuk bond in two tranches.
“At the holding company level, I need to say that there is so much confidence by the investing public in the brand so we can say today we are the largest in shareholder base,” he said.
He said that FBN Group had about 1.3 million shareholders, comprised of 17 per cent international institutional shareholders and about 36 per cent retail.
Also speaking, Mrs Ibukun Awosika, Chairman First Bank of Nigeria, said that the bank wold remain committed to the development of entrepreneurs to scale up employment rate.
Awosika said that the bank had invested heavily in organising programmes that would enhance knowledge of Small and Medium Enterprises.
Jumia, Konga list billion dollars IPOs
Jumia and Konga, two major players in the e-Commerce, are creating visible excitement with eye-catching listing of their shares on the international market.
Jumia is planning an initial public offering (IPO) in New York this year which will reportedly see the business valued at $1.5 billion.
Elsewhere, Konga, Nigeria’s biggest Omni- channel e-Commerce group, is also reportedly set for a major listing on either the London Stock Exchange or New York Stock Exchange (NYSE) by the last quarter of 2020.
Konga Group is set for an initial public offering that will see the e-Commerce giant valued at about $3.2 billion, further shoring up the potential of the industry in Nigeria, Africa’s biggest market.
Investigations reveal that Mark Jessey, a prominent stock analyst on NYSE had hinted of the strong possibility of Konga IPO before the end of next year.
A move which, according to him, is a much sought-after one by investors, many of whom have followed within the last eight months the huge strides and trajectory of the business which came under new ownership after the exit of previous majority investors, Naspers and AB Kinnevik.
While Jumia’s successful listing could help MTN reduce its debt which unconfirmed reports indicate to have increased to over five billion dollars in June from about $4.1 billion at the end of 2017, Konga’s imminent IPO is one that should see the business excite a horde of potential investors, going by the current standing of the company.
Commenting on the likely listing of Konga, Chris Uwaje, Africa chair for IEEE World Internet of Things (WIoT), noted that the company has added huge value to the e-commerce landscape which should see its value gross over $3.5 billion.
“Within the last seven months, I am aware that the new owners of Konga have repositioned the company strategically and upped the overall value of the business.
Konga could claim to be unarguably the most structured e-Commerce company in Africa, with huge infrastructure and technology back-bone which is rare in Africa and which is the strength of global players such as Amazon and Alibaba.
“In valuing Konga, you must consider its strategic 360 degrees Omni-channel strategy, their Central Bank of Nigeria-licensed mini bank – KongaPay which I am sure cannot be valued anything less than $750 million and best in Africa digital logistics division known as Kxpress with a nationwide network.
“I know Konga is likely the only company that does about 90 per cent of her long haul and last mile deliveries in the continent,’’ Uwaje said.