NGX Group: Seen focused on strengthening capital structure
On Friday September 30, the shareholders of Nigerian Exchange Group Plc (NGX Group) will meet in Lagos for the company’s 61st Annual General Meeting (AGM) to transact both ordinary and special businesses of that day.
Nigerian Exchange Group Plc is a leading integrated market infrastructure in Africa which services the largest economy in Africa and is strengthening the competitiveness of African economies to achieve global prosperity.
As a key player in the continent’s financial markets, NGX Group takes an active role in shaping the future of the markets through its investment in business innovation and technology.
According to the notice of the meeting made available to the investing public, the company will as part of its ordinary business lay the audited financial statements of Nigerian Exchange Group Plc for the year ended December 31, 2021, and the reports of the board and the auditors thereon.
Also, as part of the meeting’s special business, the Board of Directors of NGX Group will be seeking shareholders’ approval to raise additional capital of up to N35billion through a hybrid offering of equity and debt in the following quantum: up to N20billion (or its US Dollar equivalent) in equity and up to N15 billion in debt (Capital Raise Transaction).
About the capital raise
“The Capital Raise Transaction may take the form of the issuance of shares (whether by way of a public offering, private/special placement, rights issue) global depository receipts, convertibles or non-convertibles, medium term notes, notes, bonds and/or any other instruments or methods either as a standalone or by way of a programme, in such tranches, series or proportions, at such prices, coupon or interest rates, within such maturity periods, and on such terms and conditions; including through a book building process or other process all of which shall be as determined by the Board of Directors, subject to obtaining the approvals of relevant regulatory authorities,” according to the September 7 notice signed by Mojisola Adeola, Group Company Secretary/Head, Compliance, NGX Group Plc.
Optimising the Holdco growth
The demutualisation of then Nigerian Stock Exchange (NSE) resulted in its operational structure change from a Company limited by guarantee to a Company limited by shares. Part of the restructuring activities include the reallocation of the assets and liabilities of the NGX Group to the newly emerged entities, the Nigerian Exchange Limited and NGX Regulation Limited. NGX Group also restructured its business operations by splitting its expenses and income streams to relevant entities within the group.
NGX Group provides a wide range of services including listing and trading securities, licensing, market data solutions, ancillary technology, regulation, real estate, and more through its wholly-owned subsidiaries – Nigerian Exchange Limited, NGX Regulation Limited, and NGX Real Estate.
With shares outstanding of 1,964,115,918 units, each valued at N19.7kobo as at September 13, the NGX Group is listed on the Other Financial Institutions subsector of the Nigerian Exchange Limited (NGX) financial services sector. The Company was listed by introduction on the floor of the Nigerian Exchange Limited on October 15, 2021 and became a Public Listed Company. The Memorandum and Articles of Association of the re-registered Exchange was also amended to the new name, Nigerian Exchange Group. The Group also invested in the financial infrastructure space with investments in NG Clearing Limited, Central Securities and Clearing Systems (CSCS), OTC platforms and three fintech companies.
Its full year 2021 scorecard
Nigerian Exchange Group audited results for the full year ended December 31, 2021 showed the Group’s gross earnings grew to N6.8 billion from N6 billion, resulting in a 13 percent increase. Revenue rose by 14.9 percent from N5 billion recorded in 2020 to N5.8 billion in 2021. Also, the group’s profit before tax (PBT) increased by 25.4 percent to N2.4 billion from N1.909billion in 2020, while its profit after tax (PAT) rose by 22.2 percent to N2.3 billion from N1.84 billion recorded in the corresponding period of 2020.
According to the Group, the jump in its full year 2021 revenue was driven by a 24.8 percent growth in listing fees, which grew to N757.4 million as against N606.9 million in 2020; 4.9 percent growth in its treasury investment income and a 2.1 percent growth in transaction fee, which rose to N2.9 billion from N2.8 billion recorded in 2020. Further analysis of the NGX Group’s result revealed that its return on equity grew by 70 basis points to 6.6 per cent while its return on assets stood at 5.9 per cent from 5.2 per cent recorded in 2020.
Stakeholders speak on the results
“We are delighted at the progress reported for FY 2021 across strategic, operational and financial aspects of the Group’s business. The Demutualisation and Listing by Introduction were significant and unprecedented milestones for the Group and we would like to thank our stakeholders for their support and trust in the Group’s quest to unlock its true value and diversify its operations and product offerings.
“All within one year, we demutualised, restructured, and listed the business with the Holdco being the investment holding company with three operating subsidiaries and other associate companies and equity investments.
The Board has during the year under review, focused broadly on adapting to the enhanced corporate governance demands following the change in organizational form, while exercising its oversight functions on strategy development and execution and drilling down on emerging value accretive opportunities presented by the demutualisation. In 2022, the aim is to continue to strengthen the NGX Group brand to make it a globally respected and a regional and national significant economic actor,” said Abimbola Ogunbanjo, NGX Group Chairman.
Also speaking, Oscar N. Onyema, Managing Director/Chief Executive Officer, NGX Group noted that the Group went through a restructuring of its business to refine its business model, with increased focus on expanding into new business areas, which is reflective in the activities of the Group.
According to Onyema, NGX Group, in 2021, focused on formulating and executing the strategy of the Holding company, which includes building multiple businesses across the entire capital market value chain with diversified revenues as well as strategic and operational flexibility. “Gross earnings growth of 13percent coupled with after tax profit growth of 22.2percent is an encouraging start to our journey as an investment holding company”.
“Going forward our focus remains: on strengthening our capital structure; being active in every sphere of the capital markets value chain in Nigeria, but also growing our presence across Africa as a leading integrated market infrastructure provider; optimising our current investments and making new strategic investments; and recruiting top talents to execute our strategy. We aim to continue to create value, optimise profitability and build a sustainable business in alignment with stakeholders’ interest,” Onyema said.
Also speaking virtually during the Group’s 2021 financial year investor and analyst presentation, Onyema said the Group is focused on revenue diversification, optimisation of profitability, and building a platform business to drive the increase in recurring income.
He added that the Group is also positioned on investment in new strategic opportunities, support achievement of strategic goals of its subsidiaries, and increase resilience across the Group, adding that the focus on executing deals and transactions to scale business, raising capital, and optimal corporate governance structures are part of the plans of the non-operating holding company (Holdco) to optimise growth.
According to Onyema, the revenue of NGX Group is made up of dividends and treasury investment income. “Dividend income is generated from dividends paid by the subsidiaries, and associates companies of the group, while the treasury investment income includes income from bonds, treasury bills, and fixed deposits.”