Nigeria listed for Egyptian bank’s N1.5trn investment drive

The gradual return of foreign investors into Nigeria’s equities market is gathering momentum following resolve by owners of EFG Hermes, an investment bank in the Middle East and North Africa (MENA) region, to venture into the Nigerian market with as much as N1.5 trillion ($500 million) investment in the next 18 months.

The investment is part of the bank’s recent move to Pakistan for the same reason and intended spread to other parts of the world, including Africa, with emphasis on Nigeria and Kenya, according to report by Bloomberg. CEO for frontier markets at the Cairo-based bank, Ali Khalpey, said: “Argentina, Vietnam and Nigeria could be among the beneficiaries. A lot of people haven’t owned Nigeria, though there have been some reforms in the forex side. If you believe there are going to be structural reforms, Nigeria is a good place to have a look. Argentina and Vietnam have seen massive outperformance.

“Kenya, Nigeria, Bangladesh and Vietnam are potential markets. It will be a combination of Greenfield start-ups or acquisition of smaller businesses that we grow. We will be in Africa shortly, and in the next 18 months have our footprint in two countries.”

EFG Hermes specialises in securities brokerage, asset management, investment banking, private equity and research. It also serves a range of clients including sovereign wealth funds, endowments, corporations, financial institutions, highnet- worth clients and individual customers. It is listed on the Egyptian and London stock exchanges and has offices in Egypt, the United Arab Emirates (UAE), the Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Jordan and Lebanon and also services clients from the Middle East, North Africa, Europe and the United States as well as owning 63.7 per cent majority stake in the Lebanese commercial bank, Credit Libanais. Speaking on its immediate move, Khalpey said as much as $500million would gush into the Pakistan’s equities by the end of May, stressing that the single-day inflow, if it comes to pass, would compare with the $532 million Pakistan received in all of 2010.

“It’s a big number and there isn’t enough capacity in the system to handle the volume and value we expect,” Khalpey said. “We have worked with similar investors when Qatar and the United Arab Emirates were upgraded by MSCI.

The flows won’t be staggered. Tracker funds have to execute on the day.” At the Nigerian Stock Exchange (NSE), investor apathy has risen in recent time as both foreign and domestic participation dipped during the month ended February 28, 2017. According to data polled by the NSE, total foreign investor transaction on the NSE slowed by 21.52 per cent to N34.54 billion from N44.01 billion during the same period. The domestic transactions also decreased by 22.88 per cent from N51.31 billion recorded in January 2017 to N39.57 billion in February 2017. Foreign investment inflow declined to N16.10 billion from N22.61 billion, representing 28.79 per cent decrease, while total foreign investment outflow decreased by 13.83 per cent to N18.44 billion compared to N21.40 billion outflow in the previous month on January 31, 2017.

The statistics also revealed that institutional composition of the domestic market decreased by 21.93 per cent from N31.19 billion recorded in January to N24.35 billion in February 2017. According to the data, the retail composition also decreased by 24.35 per cent from N20.12 billion to N15.22 billion within the same period, which, according to the NSE, indicates more active participation by institutional investors over their retail counterparts within the period under review.