Nigeria’s pension industry is gearing up for consolidation as the sector is expected to see more mergers and acquisitions (M&As) in the ongoing recapitalisation in the sector.
At the moment, the industry regulator, the National Pension Commission (PenCom), has given approval for M&As that will likely bring down the number of operating pension fund administrations (PFAs), as the exercise enters the fourth month.
According to PenCom’s first quarter report, it has approved the acquisition of AXA Mansard Pensions Limited by Eustacia Limited, and the change of name from AXA Mansard Pensions Limited to Tangerine Pensions Limited.
In addition, the Commission granted “No Objection” for the merger between Tangerine Pensions Limited and Apt Pension Funds Managers Limited.
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FCMB Pensions Limited, one of the subsidiaries of the First City Monument Bank Group plc, has acquired a 60 percent stake in AIICO Pension Managers Limited.
PenCom had on April 27, 2021, mandated PFAs operating in the country to increase their Minimum Regulatory Capital (shareholders’ fund) requirements to N5 billion from N1 billion, giving them 12 months to complete the exercise.
Ehimeme Ohioma, head, Surveillance Department at the National Pension Commission, said in the circular, “The increase in the minimum regulatory capital is necessitated by the need to improve the capacity of PFAs in terms of operational efficiency, effectiveness as well as service delivery.”
The Commission said it would monitor the exercise and approve any option a PFA chooses to meet up with the new requirements.
Furthermore, the PenCom stated that sustained growth in assets implied greater fiduciary responsibilities that require more operational capacity by the PFAs.
As of May 31, 2021, total pension assets under management rose to N12.492 trillion, while registered contributors increased to 9.345 million within the same period.
According to Aisha Dahir-Umar, director-general, PenCom, the maintenance of a consistent growth trajectory continues to justify the Commission’s overriding investment philosophy of ensuring the safety of pension fund assets.
FCMB Pension Limited had in June 2020 announced that it was in talks with AIICO Pensions to acquire a total of 96.3 percent stake in the company.
The initial deal would have seen FCMB Pensions acquiring 70 percent stakes held by AIICO Insurance and 26 percent stake held by other stakeholders in AIICO Pensions.
The bank noted, “FCMB Group plc had notified the Nigerian Exchange Limited (NGX) that its pension management subsidiary, FCMB Pensions Limited (FCMB Pensions) has received relevant regulatory approvals and concluded the acquisition of a 60 percent stake in AIICO Pension Managers Limited (AIICO Pensions).
“This is made up of 33.9 percent stake held by AIICO Insurance plc and 26.1 percent stake held by other shareholders in AIICO Pensions.”
FCMB Pensions Limited (formerly Legacy Pension Managers Limited) is a private limited liability company incorporated on April 7, 2005. It is duly licensed by the PenCom to carry on business as a Pension Fund Administrator as defined under the Pension Reform Act, 2014. FCMB Pensions is a subsidiary of FCMB Group Plc.
Chief executive officer of one of the PFAs, who does not want his name mentioned, said, “As a company we are doing something about our recapitalisation, but I will like to give you details when I have gotten approval from PenCom.”
The industry will not remain the same after the recapitalisation exercise, the CEO noted, but I hope to see some consolidation in the industry after the expiration of the compliance deadline.
