Category Archives: Asset Management

The assets under management (AUM) of the Nigerian regulated pension industry increased by 20.2% y/y in September to N7.16trn (US$23.4bn), and by 1.0% m/m.

Healthy growth at PFAs, coverage still thin

                                                                                          

The assets under management (AUM) of the Nigerian regulated pension industry increased by 20.2% y/y in September to N7.16trn (US$23.4bn), and by 1.0% m/m. They are growing at a decent rate yet, at just 7.1% of 2016 GDP, are running well behind many emerging markets.  The local media quote the regulator PenCom as saying that monthly inflows are averaging N30bn. At a recent real estate conference in Lagos, it was argued that the industry has somehow to accommodate the informal sector, which accounts for 83% of the national workforce.

                                                                                                                  

  • This could, the argument ran, simultaneously make an impact on Nigeria’s huge housing deficit if contributors were able to allocate some of their monthly payments to a mortgage vehicle.

  • Holdings of FGN paper amounted to 71.8% of AUM in September, compared with 70.2% one year earlier. The share of NTBs was rising until August but then declined by 90bps in September as the CBN guided rates downwards. Yields on 364-day paper have fallen by 400bps since end-August.

  • PenCom’s latest data do not indicate a surge of investment in domestic equities. The NSEASI had risen by 25.1% y/y at end-September while AUM in the asset class increased by 18.3% over the same period.
  • ·         Nigeria’s reformed pension industry, shaped by legislation in 2004 and 2014, has been a success story. Its expansion has benefited from the well-documented abuse under the defined benefits scheme. A bill in the House of Representatives seeks to remove employees of certain public agencies from the contributory pension scheme for reasons that are unclear.

     

    ·         We welcome the monthly data releases from PenCom. A next step could be independent industry analysis allowing investors to compare performance.

AMCON takes over Gateway Portland Cement

Following an injunction against Gateway Portland Cement Limited (GPCL) and Olumuyiwa Odegbami on the application of Asset Management Corporation of Nigeria (AMCON) by Hon. Justice Mohammed, at the Federal High Court, Abeokuta division, AMCON’s Receiver, Charles Adeogun-Phillips has formally taken possession of GPCL factories and facilities located in Abeokuta and Mowe areas of Ogun State over a debt profile of nearly N3billion, which has been a subject of litigation for a while.

In its ruling, the court restrained the Gateway Portland Cement Limited and its agents from moving into the firm or withdrawing money from or with any bank or financial institutions that hitherto does business with the cement company pending the hearing and determination of the suit to be filed by the applicants for recovery of its outstanding debts.

It also restrains GPCL, and the promoters by themselves, their agents, servants and, or their privies from interfering with, obstructing or frustrating the Receiver appointed by AMCON in performing his duties and directed deliver to the Receiver all the charged assets of the company in their possession forthwith.

To ensure compliance, Mohammed directed the Inspector General of Police, the Assistant Inspectors General of Police, Commissioners of Police in charge of any location where the pledged assets of Gateway Portland Cement Limited might be found to assist the bailiff and the AMCON Receiver, Adeogun-Phillips in the enforcement of the order.

AMCON under the current management team led by its MD/CEO, Ahmed Kuru, has continually maintained that there would be no rest for recalcitrant debtors of the corporation like in the case of the promoters of GPCL, which he said remains the only way AMCON mandate could be realised within the timeframe of the assignment and in the interest of the country’s economy.

Kuru had recently stated that despite efforts of the corporation to resolve the huge debts in its portfolio, it identified 350 obligors’ accounts that represent about 80 percent of AMCON’s current exposure of N2.5 trillion as at December 31, 2016. He said it was based on this that AMCON repositioned its debt recovery approach to strengthen legal and credit restructuring units- to collaborate on the aforementioned 350 accounts, which he termed “defaulters”; enhance the restructuring and turnaround team; and engage in asset tracing to enhance recoveries.

A MUTUAL FUND EXPLAINED

A mutual fund is an investment solution that allows individuals to invest in different asset classes such as treasury bills, bonds, stocks and fixed deposits. Normally, for an individual investor to be able to participate at this high investment level, the investor would need a lot of capital as well as strong financial knowledge.

Simply put, a mutual fund opens up a world of investment opportunities to individuals who do not have the time, knowledge or large capital to create their own diversified investment portfolio, but would like to see their money grow.