‘LAPO’s listing will extend company profits to Nigerians’

LAPO microfinance bank limited, a leading Micro Finance Institution (MFI) in Africa’s largest economy, may be on the brink of floating an Initial Public Offer (IPO) on the Nigerian Stock Exchange (NSE), reiterating its commitment towards economic empowerment of low income households in estimated 180 million Nigerians.

Falling household income, amid other macroeconomic challenges, is hurting the profit margins of financial institutions ranging from Deposit Money Banks (DMBs) to Microfinance Banks (MFBs). Despite this, LAPO beat analysts’ expectations, growing its Profit after Tax (PAT) by 28.57 percent to N3.6 billion in 2015 from N2.8 billion in 2014.

LAPO has maintained the tempo of 2015 in the months through 2016, and Godwin Ehigiamusoe, the company’s chief executive officer, divulged the MFI’s consideration to restructure and go public, in a bid to avail Nigerians the opportunity of sharing in its gains, as well as to grow value for shareholders.

“We have been interacting with the NSE recently. From our conversations, I’ll say we are not too far away from listing on the NSE,” Ehigiamusoe said in an interview with BusinessDay.

“The main driver of this is more of extending the company’s profits to Nigerians, than it is to raise capital for expansion from the capital market.”

Ten experts polled by BusinessDay on the implication of LAPO going public, unanimously said it held gains for the MFB, while admitting it had its fair share of gains for the NSE and the economy at large.

“It’s a welcome development, particularly owing to the fact that LAPO is the largest MFB in Nigeria and is well recognised outside the country. It holds immense upsides for the NSE and the economy,” said Kyari Bukar, CEO of Central Securities Clearing System Plc, the clearing and settlement house of the Nigerian Capital Market and the NSE, in response to questions.

“All companies considering listing on the NSE should act promptly, to access cheap equity funds,” Bukar added.

In reaction to the Central Bank’s move to float the Naira last week Wednesday, the Nigerian stock market recorded a huge gain of about N760bn in only three days. The All-Share Index (ASI), market turnover, share volume and deals also recorded significant growth, with trading levels at their highest in 2016.

Speaking on the impact of the new foreign exchange guidelines on Lapo, the once rural co-operative officer, Ehigiamusoe, says it would ease the pressure on their relationship with international partners, as the currency uncertainty demystifies.

The Central Bank of Nigeria used capital controls to stem an outflow of dollars after the naira crashed to a then-record in February 2015 as oil prices slumped. While stabilizing the currency, the controls deterred foreign investors and starved manufacturers of foreign currency needed to pay for raw materials and equipment. Nigeria’s gross domestic product contracted in the three months through March for the first time since 2004 and inflation accelerated to an almost six-year high of 15.6 percent in May.

HOPE MOSES ASHIKE  & LOLADE AKINMURELE