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Why our services as valuers are critical in capital market business – Ubosi

Why our services as valuers are critical in capital market business – Ubosi

Consultant estate surveyors and valuers registered by the Securities and Exchange Commission (SEC) say their services as valuers are critical hence their appeal to the commission for consideration in the practical application of all capital market businesses.

The valuers, under the aegis of Association of Capital Market Valuers (ACMV), were in Abuja recently on a courtesy visit to SEC during which they highlighted the significance of their services in capital market operations.

Chudi Ubosi, the chairman of the association, explained that the significance of determining the value of organizations’ assets in the Capital Market cannot be over-emphasized, noting that valuation is not only the bedrock for decision making, but also a helpful tool in a range of work situations.

He added that valuation is useful to price an organization and to estimate and value synergies during mergers, acquisitions and divestment just as value is useful to assess the potential of different strategic options in case of strategy development.

“When a business wants to raise money; when they need to determine how much should be raised as well as when they approach the negotiating table, valuations are needed in all instances,” he explained.

Ubosi, a Fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) and Principal Partner at Ubosi Eleh + Co, stressed that it is imperative that accurate assessment of company assets should be done for accountability, transparency, etc. which help to engender investors’ confidence in the market.

He noted that when there are valuations that have integrity, it will boost investors’ confidence in the market and that is because the investor is certain that what is being valued is actual, and nothing is hidden.

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“We are aware that registration is the entry point for all Capital Market Operators and with the enactment of the Investment and Securities Act 2007, these registrants are required to meet a certain cash/assets’ mix in their capitalization.

“Some of these entrants may engage valuers whose allegiance is not to SEC, meaning that the integrity of such valuations may be at stake and the results questionable. We believe that an operator with the cash/asset mix of 60/40 ought to have those assets valued to ensure they are genuine.

“Our role as Estate Surveyors and Valuers in determining the value of the assets of these companies will ensure transparency, accountability and continued enhancement of investor-confidence in the market,” Ubosi assured.

He urged SEC to look into all its operations and see how to ensure that valuation is done by SEC’s registered valuers, especially in raising capital, listing Sukuk, bonds, etc, stressing that valuers have important roles to play in these matters.

The association used the opportunity to inform SEC of its plan to host a workshop with the theme, “Asset Valuation As An Economic Tool For Decision Making in the Capital Market” scheduled for the second week of March 2022.

According to them, the workshop would be discussing and training members on the valuation of companies, their assets, proper registration and evaluation of estate surveyors, housing investors and related parties to see to the growth of the sector on the stock market.

“It is our hope that the workshop will mark a further integration of the services of Estate Surveyors and Valuers into the day-to-day operations and activities of the Capital Market and also deepen the relationship with the Commission and Capital Market Operators,” Ubosi said.

He assured that as a Trade Group, they are up to the task in terms of controlling and disciplining their members and have put in place checks and balances to guarantee that their members played according to laid down rules and regulations.

In his response, Lamido Yuguda, the SEC Director-General, took a look at developed countries such as the United States where he said that 20 percent of their GDP is contributed by the housing sector, making the sector a major contributor to variations in their stock market and wealth of their nation.

But in Nigeria, that is not the case as the housing sector has little impact on its GDP and its stock market due to the fact the housing system is largely controlled by individuals who plan to keep their homes for inheritance purposes, whether in use or not, with no control by the government

The DG cited a study carried out on the Nigerian housing market which showed that the small mortgage units of the housing market are two-bedroom apartments, which is not sustainable with Nigeria’s level of economic development and standard of living.

He cited the Nigerian police and army who do not have the ability to afford their own homes in the mortgage system given the prices which are not within their pay range. This is the opposite of what obtains in developed countries where their defence staff can afford to start with small mortgage units and move to bigger ones as time goes on based on discounts given to them by the government.

He, therefore, challenged the association to start seeing to the expansion of the sector to accommodate smaller mortgage units and also start bringing in relevant data and registration for a mortgage which could enable the boosting of the country’s GDP and its stock market.