In an interview with Eniola Olatunji of BusinessDay, Bawo Oritsejafor, managing director United Capital Securities says the firm was recently recognised as the number one stockbroker by value on the Nigerian Exchange for July 2024, trading N276.86 billion year-to-date
Despite market fluctuations and economic windfalls, you traded equities deals worth N128.524 billion, representing 26.4 percent of the stocks traded that month. What are the factors and strategies behind this consistent upward growth and consistency?
We are incredibly grateful for this recognition. The steady growth of our business has been remarkable. Back in March 2024, we were the Number 1 broker by value with equity deals worth N80.355 billion and now, in July, we are again the Number 1 broker by value handling equities deals worth N128.524 billion, marking a growth of approximately 59.94 percent and ending the period as the industry’s leading stockbroker.
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Achieving this recognition is a testament to the hard work and dedication of our entire team. At the heart of our success is our exceptional workforce, especially our expert traders and strong research team. Their expertise allows us to make informed decisions and seize market opportunities effectively. We’ve also built a solid risk management framework that keeps us agile and prepared for market fluctuations, ensuring we can protect and enhance our clients’ investments.
Other contributions to our success have been our CEO breakfast sessions with other financial service industries to drive inter-sectoral collaborations which has broadened our horizons and created new growth opportunities.
Digital transformation has also been a major propeller for us. By digitizing our stock trading process, we have been able to increase retail participation and significantly grow our customer base. This digital transformation has not only made trading more accessible but also more engaging for our clients.
We’re also passionate about customer education. By providing insights into stock trading and its potential, we’ve empowered more people to confidently participate in the market. Our focus on digital transformation and customer education ensures we stay ahead, delivering an exceptional experience that keeps clients coming back.
In essence, our success is the result of a holistic approach that combines the expertise of our workforce, strategic partnerships, cutting-edge technology, and a commitment to customer education and satisfaction.
The Nigerian stock market has been a standout performer in 2024, ranking number one stock market in Africa for the first half of the year. What do you believe are the driving forces behind this and why has there been such a surge in interest, especially amidst market fluctuations?
Absolutely, the Nigerian stock market’s performance this year has been nothing short of extraordinary. Several key factors have contributed to this robust growth. Naturally, a bullish market attracts investment. When the market is on an upward trajectory, it creates a ripple effect, investors become more eager to capitalize on the positive momentum, and as more people get involved, the market continues to climb.
Another significant factor has been the entry of new players. For example, Transcorp Power’s market debut in March 2024, with a market capitalization of N1.8 trillion, was a major milestone. Our role as both the stock trader and lead issuing house for this listing was pivotal. Such high-profile entries inject fresh capital and spark interest in the market.
Corporate earnings have also been a major driver. Strong earnings reports and corporate actions from leading companies have enhanced investor confidence.
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For instance, at United Capital, we saw a 65 percent increase in profit after tax for the first half of 2024, reaching N7.7 billion. Additionally, our year-on-year profit grew by 38 percent to N15.15 billion, with total assets expanding by 27 percent to N1.19 trillion.
This performance, coupled with our interim dividend declaration of 90 kobo per share and a 2-for-1 bonus issuance, has significantly bolstered shareholder confidence and positively impacted our share price.
Technology is another game-changer. It has democratized access to the stock market, particularly for younger investors. Digital platforms have made trading more accessible and have attracted greater foreign participation in the Nigerian stock market. For example, in the first half of 2024, foreign portfolio inflows into the Nigerian Exchange (NGX) amounted to about $161.4 million.
Lastly, investor education has played a crucial role. Increased awareness and understanding of market dynamics have empowered more individuals to participate actively and make informed investment decisions. All these factors have created a vibrant and attractive environment for investment in Nigeria’s stock market.
The capital market is set to raise about N3 trillion on behalf of banks from this exercise, what are your thoughts on the initiative and its progress thus far? Also, how is United Capital Securities positioning for this exercise?
The bank recapitalization program was proposed by the Central Bank of Nigeria (CBN) in a bid to strengthen the asset base of commercial banks and support economic growth, in line with the Federal Government’s target of achieving a US$1 trillion economy by 2030.
So far, I would say the process has been progressing well. Although not all commercial banks have made announcements, those that have are doing a commendable job of adopting innovative strategies and creative methods to promote their offerings and engage stakeholders.
At United Capital Group, we play a pivotal role in this recapitalization process as a leading player in the capital market. Our responsibility is to facilitate the program by ensuring a smooth, transparent, and efficient capital-raising process.
On the securities trading side, we assist banks in raising additional capital by helping them issue new shares through public offers and/or rights issues, acting as an intermediary between the banks and potential investors. Our investment banking team works closely with top commercial banks, providing comprehensive financial advisory services to help them structure and execute their recapitalization plans efficiently.
With the collective wealth of experience and expertise of our professional team, we are well-positioned as a group and confident that our efforts will contribute significantly to the success of this initiative.
For investors, what benefit does this recapitalization process offer and how can they take advantage of this process?
The recapitalisation process provides significant benefits for investors, particularly regarding growth opportunities.
The banking sector has been credited to be one of the major contributors to the Nigerian Exchange (NGX) whose market capitalization sits at approximately NGN 55 trillion as of August 2024.
This influx of capital allows companies to scale and expand. If you observe the announcements from banks undergoing recapitalization, they have shared their growth objectives and strategies, showcasing promising plans for expansion. Investors participating in public offers or rights issues can tap into these growth opportunities and potentially benefit from future success.
With rights issues in particular, existing shareholders can buy additional shares at a discounted price, offering a cost-effective way to increase their stake in trusted companies. This helps maintain or boost ownership percentages, preventing dilution of their existing holdings and potentially increasing their influence in the company.
There’s also potential for capital appreciation. Acquiring shares at a discount can lead to significant gains if the company performs well post-recapitalization, as share values could rise with strengthened financial positions.
To make the most of these opportunities, it is necessary for investors to conduct their due diligence, research the company’s financial health, growth strategy, and market position to make informed decisions. It’s also important to assess one’s financial goals to ensure that investing in recapitalization aligns with their objectives and risk tolerance.
At United Capital Securities, we provide sound guidance and resources to help investors make informed decisions based on sound fundamentals. We have also simplified access to information about the offers, ensuring clients stay informed on announcements and timelines related to recapitalization.
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Public offers and rights issues often have open and close dates, so timely communication is crucial. Customers can easily visit our website for comprehensive information and to declare their interest. Alternatively, a simple email to our customer service or stock trading team will seamlessly facilitate their participation.
Next week, we will also be hosting a webinar exploring every facet of this topic. It is a valuable opportunity for interested investors to gain in-depth insights, ask their questions directly, and participate confidently in the recapitalization program.
Aside from the bank recapitalisation efforts, what other plans does United Capital Securities have for the rest of the year?
As we progress through the year, you can look forward to a range of exciting developments from United Capital Securities. Our primary focus is on bolstering retail participation in the Nigerian stock market and democratizing investment opportunities. To achieve this, we’re advancing our technological capabilities and exploring new channels and innovative solutions to broaden our market reach.
Additionally, we will be announcing several strategic partnerships and hosting our annual CEO Breakfast Forum later this year. This forum will further our commitment to fostering intersectoral collaborations and driving market expansion.
Our goal is to continuously set new benchmarks in the industry, so stay tuned for impactful and transformative developments ahead.
