Vanguard Markets, August 4, 2014 edition

Vanguard Markets | Monday, August 4, 2014 | Issue 004

TAKEOVERS

Walking on water or skating on thin ice? ! page VM6 Wale Tinubu

C-SUITE

Inside

Sonnie Ayere, Mortgage Czar

Boardroom grandee

In Corporate Nigeria, Senator Udo Udoma is known for his experience and sage counsel.

! Page VM6

Whodunnit at Afren?

The announcement that Afren’s board has sent its CEO and COO on temporary suspension riled markets at the end of last week. Some analysts fear that this may be the tip of the iceberg.

! Page VM7

Sonnie Ayere, chief executive officer, Nigerian Mortgage Refinance Company

ONNIE AYERE, chief executive officer of the Nigerian Mortgage Refinance Company (NMRC), is the consummate investment banker. Sitting in his plush office overlooking the Ma-

S

rina and admiring acrylic deal plaques, one may be forgiven for thinking this is the lair of a Master of the Universe in lower Manhattan, with sights of the Hudson River.

Usually, the first thing most people notice about him

is that the man has a sense of effortless style. This time, the talk is not about shopping forays on London’s New Bond Street. It is about his infectious passion to lay the pipelines between bond investors and home buyers.

As the mortgage industry grows it will add hundreds of thousands of new jobs and skills to the Nigerian economy each year ! Page VM2

Currency

Central Rate

US Dollar

155.23

Pounds Sterling

261.2831

Euro

208.0392

Swiss Franc

170.977

Japanese Yen

1.5077

CFA

0.3066

WAUA

236.9421

Chinese Yuan/ Renminbi

25.1165

Saudi Riyal

41.3903

Danish Krona

27.8975

SDR

237.6727

Fixed Income & Forex

FGN Bonds & TBills 120B

FGN Bonds Treasury Bills

11.6

90B

11.2

60B

10.8

30B

10.4

0B

1M 2M

NITTY

3M 6M

9M 12M

10.0 16/07

21/07

24/07

31/07

O/N 1M

NIBOR 15.0

3M 6M

22/07

25/07

01/08

162.5

14.0

162.2

13.0

161.9

12.0

161.6

11.0

161.3

10.0 17/07

Bid Ask

FX ($/N)

161.0 17/07

22/07

25/07

01/08

17/07

22/07

25/07

01/08 Source: FMDQ

VM2

INTERVIEW

VM | Monday, August 4, 2014 | Issue 004

C-SUITE

Home ownership revolutionary In this interview, Sonnie Ayere, chief executive officer of the Nigerian Mortgage Refinance Company, tells Obiora Onyeaso about the institution’s mandate, its vision to make every Nigerian family own their home, and his own career.

W Continued from Page VM1 OUR FORMAL designation at the Nigerian Mortgage Refinance Company is CEO. What does this role entail?

I hold this title for a defined period at the discretion of our board, chaired by the Coordinating Minister of the Economy.

When I was appointed, I was given responsibilities to meet certain milestones, one of which is the first refinancing of NMRC. On a day-to-day basis, I oversee the setting up of the institution by attracting the right people, putting in place the right processes and working to create the right enabling environment for the achievement of the institution’s mandate.

Y

Tell us a bit more about the NMRC NMRC is a secondary market financing institution. It is a high finance vehicle established to provide long-term funding to mortgage lenders and create corresponding financial products to be issued to the capital markets on a regular basis. The complexity of the institution comes from ensuring that the issued securities match the cash flows of the underlying mortgage pools. In addition to its role as a refinancer of mortgages, the NMRC will also service and manage various bond portfolios with different durations, and average lives. How well we do all these will determine the success of the entire transformation we hope to see in the mortgage industry.

NMRC will provide longterm funding to institutions that have created NMRCconforming mortgages. Previously, the problem lenders faced was the lack of access to long-term funding, that is, 2025 year money to on-lend to home buyers.

How does NMRC help mortgage lenders match assets with liabilities?

Financial institutions get the money for mortgage origination from customer deposits and money markets. This creates two problems: a classic asset-liability mismatch between long-term asset creation and short-term liability management, and the illiquidity burden of carrying these mortgages on their balance sheets for the duration of the mortgage.

These are the two most debilitating reasons why the mortgage industry has not taken off in Nigeria apart from all the other bureaucratic and legalistic issues, important as those are.

After the mortgage has been underwritten, the mortgage

institution can approach the NMRC to request a refinancing for the duration of the mortgage. If it meets our conditions, we will approve it. In theory, this allows the institution to pay off its short-term creditors or replace its depositor’s finance, and then enter into a new long-term contract with the NMRC. Two things have now happened. First, the mortgage institution’s assets now match its liabilities, and second, it can go ahead to make new loans with the knowledge that the NMRC stands ready to refinance them if they meet its criteria. This has a chain effect on the economy.

More loans to home buyers equals more jobs, more jobs mean greater consumer spending, greater consumer spending means more investment lending by companies, and it goes on like a virtuous positive cycle.

What if borrowers default?

NMRC is hedged from default by borrowers because the mortgage lenders retain the credit risk on their books. It is protected by the nature of the covenant with the institutions, which is a bilateral loan. A mortgage lender will still be responsible for making sure that the loan is serviced, while the asset itself is pledged to protect NMRC in the event of a default.

In the event of a catastrophic event, the government, because of its explicit guarantee of NMRC-issued bonds, will make bond investors whole with the commitment that NMRC will liquidate the pledged assets to counterguarantee government support. In order words, government exposure is fully secured and over-collateralised making the overall expected loss, even in times of stress, pretty low.

How did you get involved with the NMRC? There are two sides to my involvement, first with the institution itself, and then with the broader development of the bond market in Nigeria.

My direct involvement with the NMRC goes back to conversations that I had had with the International Finance Corporation in the early months of 2012 on the creation of a mortgage liquidity institution.

At the time, the IFC had already begun discussions with the CME, Dr. Ngozi OkonjoIweala, on how this could be actualized.

On my part, I held some exchanges with the CME on my ideas about how to make it a success. She deserves credit for her drive to see this vision take off. She co-opted the Bankers’ Committee and other stake-

holders to make this see the light of day. Other sponsors like the Mortgage Bankers’ Association of Nigeria, Bankers’ Committee, the Central Bank, and individuals like Roland Igbinoba deserve appreciation.

Immediately after the National Retreat on Housing which was initiated and chaired by President Goodluck Jonathan at the Presidential Villa in November 2012, who is extremely passionate about this sector, I transitioned from an advocacy position to an executive capacity when the CME asked me to carry the vision forward in the role of Task Manager.

Demographic figures show that over 65% of Nigerians are below 25. For generations, most salaryearning Nigerians have seen home ownership as the result of decades of saving for a purchase just in time for retirement. This is in contrast to the case in developed countries. What are NMRC’s plans to radically drop the entry age for home ownership?

NMRC will help to radically change people’s attitudes to home ownership and real estate investment. For example, when the mortgage lenders can quickly refinance mortgages, they will start offer promotions create awareness and win clients. As people become more aware of the ease of owning a home, they will start to make the decision earlier in life.

When the full cash payment restriction is removed, and buyers need put down no less than 20 per cent cost of the house as their equity contribution, I believe we will see the age floor drop dramatically. This will be supported by other changes taking place in the economy such as the preponderance of

NMRC will provide long-term funding to institutions that have created NMRC-conforming mortgages. Previously, the problem lenders in Nigeria faced was the lack of access to longterm funding, that is, 20-25 year money to on-lend to home buyers.

What NMRC will do is to allow commercial banks and mortgage banks match these assets with 20year liabilities on their books.

two-income families that can afford the costs of paying mortgages, as well as the recent revision in the pension law that allows people take money from their pension schemes to invest in home ownership.

I will like to help create the property ladder where young persons can start from a selfcontained apartment and grow into a family 3-4 bedroom house over the course of their careers.

But this is not simply about home ownership. It has just as much to do with wealth creation and giving people a stake in the society. Take the example of a young couple in their late-20s who plan to buy a 1-bedroom house on the Lekki-Ajah axis that costs N20m. Let us assume that a mortgage lender agrees to lend them 80 per cent of the purchase price, that is N16 million. The couple provides the balance of N4m, five years down the line, the home appreciates in value to N30 million.

They decide to sell. Give or take, after paying back the principal, interests and fees, the couple will have at least N14 million equity in the home from the initial N4million investment. If they take this amount and reinvest in a bigger home, or two more of the same kind, they are already on the escalator of building wealth for their family. Should they replicate this process five times over the span of their thirty-five year working careers, you will agree that the amount of value they will create for themselves is clear. This is the type of mind-set shift that NMRC will help unlock for millions of Nigerians.

Critics in some quarters have described the creation of the NMRC as institutional duplication of an area already being served by the Federal Mortgage

Overview of NMRC’s secondary financing function A. A family approaches bank for mortgage loan and receives approval.

Mortgage Lenders

B. The lending bank approaches NMRC to refinance the mortgage to balance its long-term asset-liability mismatch.

B

A

C

Mortgage-backed Securities

Homeowners

D Corporate Bonds

C. NMRC packages a pool of compliant mortgages as bonds and mortgage-backed securities. It sells these to investors. It manages the cash flows from these pools and passes them on to the investors.

Investors

D. Investors buy the fixed income securities created and sold by NMRC for their portfolios providing critical liquidity to the growth and sustenance of Nigeria’s mortgage market.

Infographic by Publican Media

VM | Monday, August 4, 2014 | Issue 004

INTERVIEW

VM3

C-SUITE Bank of Nigeria. Is this a valid concern?

Ideally speaking, using the National Housing Fund (NHF) criteria, which sets the ceiling for mortgage loans at N15 million, I would recommend that

the NMRC will invite Nigerians to partake in its future benefits.

Apart from financial gains, what other benefits would the NMRC offer to the average Nigerian?

Experts’ project that for each new standard 4-bedroom house built there are 7 new jobs created during the actual construction process.

When one includes the number of new jobs and investments that are made throughout the entire value chain of home building, the number goes even higher. the FMBN focus on the affordable housing space where loan demands do not exceed N15 million. This is an area where it has a long record of competence.

On the reverse of that coin, the NMRC would apply its resources to refinancing mortgages that exceed N15 million in value. The reality is that the market is so big that when the industry takes off, as it certainly will, there will be more than enough room for the NMRC and FMBN to operate without encroaching on each other’s terrain.

One area that has received scant attention among the mandates of the NMRC is job creation. Could you shed some more light on how the growth in approved mortgage volumes will boost employment?

Experts’ project that for each new standard 4-bedroom house built there are 7 new jobs created during the actual construction process. When one includes the number of new jobs and investments that are made throughout the entire value chain of home building, the number goes even higher.

As the mortgage industry grows it will add hundreds of thousands of new jobs and skills to the Nigerian economy each year driven by companies servicing the entire building sector. My hope is to see major domestic and foreign direct investment come into Nigeria to service this space as economies of scale will now make sense.

Standardisation of properties will also help.

In terms of market size, Nigeria’s housing deficit is estimated at 17 million. If we calculate the cost of each new home at an average of N5 million, this gives a value of N85 trillion, which is equivalent to a $500 billion, that is, the same amount as our rebased gross domestic product.

Are there plans to list the NMRC on the Nigerian Stock Exchange?

At the appropriate time the NMRC will offer an opportunity for Nigerian investors to participate in its success story.

When the business grows to a level where its revenues and cash flows reach a steady level,

The benefits will be financial, social, economic, and political. On a side note, as more Nigerians access mortgages and are pulled into the credit ecosystem, the government will have a greater incentive to manage interest rates so that payments are sustainable for households and voters. When interest rates are high, as we have had in the past few years, it gives financial institutions an inverted incentive to invest in government securities instead of lending these funds to households, and business owners. As a trained financial economist, I am yet to hear of an economy that has grown to its full potential under a high interest rate regime.

I hope that the more Nigerians take mortgages, the more government will become compelled to keep interest rates manageable. This can only result from prudent economic policies and good governance.

They are all interrelated. A seminal paper, which articulated my ideas and which I co-wrote in 2010, Nigeria: Before the Oil Runs Dry, sets out the case for developing a federal structure that incentivises states to independently generate revenues. Housing is a major source of tax revenues so expanded home ownership will profit state governments’ coffers as well. It is also an important forward indicator of economic health, which is why new home construction figures are closely watched by economic policy makers and academics in developed countries.

With initial shareholders’ equity of $37 million, and possible off balance sheet funding options it is expected that the NMRC will be regular issuer of bonds to finance its mortgage buying programs.

How soon can investors expect to see the first NMRC paper?

Our target is to have the first refinancing in the last quarter of this year, and no later than the first quarter of 2015. Once we issue the first bonds, we expect to be a regular issuer to enable the NMRC to finance its mandate. The demand from investors is there so we envisage a good reception.

Prior to your current position as CEO for NMRC, you founded Dunn Loren Merrifield. At that time, the market already had dominant players. What client needs did you identify that could be served better at the time?

This is a question I’ve been asked before. DLM hung our shingle above the door in 2009. It was the lowest point of the global financial crisis.

I made the decision to open shop then because I am a contrarian at heart. For instance I believe that the hardest times are also the best times to start a business because you either sink or swim. When times are good, money is cheap but at the peak of markets, the next is the trough, commonly referred to in economics as business cycles.

Of course, there was also the hunger to build a business. I was 42 and I said to myself that if I keep putting this off after a certain point the drive may no longer be there. I had been

Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough and John Helyar

early stages of your professional career. How did this happen?

Although I was studying financial economics at university and dreamt of working in finance, chance and opportunity have played a big role in my career. I had a friend who always used to talk of life in the City’s financial circles. I also watched Wall Street, the movie, and read Barbarians at the Gate, about the RJR Nabisco takeover and other books about Wall Street back then. These had a profound influence on my young, impressionable mind.

My entry into structured finance in 1997 was not planned.

But now I look back I see that my bosses must have recognized my innate creative talent and decided to channel my energies into that area. I have not looked back since because for me, this is a passion, and I am grateful for it.

You have led several deals using innovative structures. One analyst has called them ‘deal artistry’. Describe the intellectual fulfilment of a well-executed complex transaction?

Of course, there is a sense of fulfilment that comes from the knowledge that our humble efforts will enable a company pay for a new factory, increase production in multiples, or complete a takeover. Successful businesses touch lives positively.

There is a craftsmanship to what we do. The way obligations and expectations are worded in contracts may seem abstruse to many. To us, they have a poetic beauty when they

There is a sense of fulfilment that comes from the knowledge that our humble efforts will enable a company pay for a new factory, increase production in multiples, or complete a takeover. Successful businesses touch lives positively fortunate to have worked with Tony Elumelu, an excellent mentor and believer in people.

The successes we recorded at UBA Global Markets, which I set up with his guidance as the pioneer managing director, gave me the confidence that I could repeat the same.

Finally, I had been in the market long enough to identify a number of shortcomings in the way clients were served, and institutions run. I was, as some said, brave enough to want to do it better, to build a firm in the image of the best franchises you would find in the City and Wall Street. My vision was to build a firm that tied up origination, distribution, and trading, the three legs of the investment banking stool under a single seat.

You have been involved one way or another with real estate financing and deal structuring from the

are done right and achieve their purpose.

One engagement I recall demonstrates this. A few years ago, we helped a fast food chain structure a future flow securitisation that if it had been done would have allowed it to fund its business and pay back in a way that had not been attempted in this part of the world before. Essentially, we helped the company sell its receivables forward. The ability to do deals like that in a way that is sustainable for the borrower, complies with the law, addresses tax concerns, and takes care of myriad other matters that must be taken into consideration, gives me a great sense of psychic satisfaction.

How hard was it attracting the right calibre of talents to work on projects or tasks handed to you and how much harder is it to keep them?

In reality, it is hard to find good people, and tougher to keep the best of them. In my experience, the empathy between bosses and employees is very important. The culture we are building here is one that encourages professional growth, knowledge sharing, an espirit de corps from being part of an elite team of problem solvers, comfort in the work environment, and mutual respect. We do not just mouth these things. I made a conscious decision to build the firm on these principles. These are what helps to bring in good people, and keep them.

The most successful CEOs confess to having legacy and transition at the back of their minds.

How would you rate leadership development at Dunn Loren Merrifield?

When we started here we were a single company called Dunn Loren Merrifield Limited. Today, we have transitioned to a group with more than one institution under that brand: DLM Advisory Partners, DLM Securities, DLM Asset Management & Research and DLM Nominees.

None of the leaders at these companies started off as managing directors. They learnt under me, matured, and were adjudged ready to run independently. This is a testament to the grooming we put in place here.

You have post graduate qualifications from the University of Dundee, Cass Business School, and the London Business School. How important is classroom learning for a successful career in investment banking?

A sound education is very important. But classroom learning should be seen for what it is and not over-rated.

Frankly, I would rate academic learning at 30 per cent of what it takes to become a successful investment banker.

It may surprise you to learn that many top investment bankers in the City studied courses like mathematics, biology, English literature, and philosophy or politics at Oxbridge, and not accounting, banking or finance. How do you square that with the fact that they are some of the best quant traders or M&A specialists?

In my case, the most important learning I had was when two mentors from Moody’s Investor Services, the rating agency, took me by hand and decided to give me value by teaching me the nitty-gritty of structured finance from how to understand the hidden meanings in prospectuses for complex securities to constructing innovative deal structures. This was field practice at its best.

There is a perceptible shift in the balance between bonds and equities

in favour of the former.

The latest statistics show bonds hovering at 30 per cent of market capitalisation. What is responsible for this trend and will it continue?

If you look at the balance sheet of companies you will find that the debt component outweighs the equity component by a ratio of at least 2 to 1, and in most cases, multiples of that depending on the industry. Due to the early stage of development of Nigeria’s fixed income market, many companies that should be financing their growth and operations with bonds are still dependent on bank loans and share sales.

Macroeconomic policy also plays a role in all of this. I believe that if the Central Bank of Nigeria had kept the monetary policy rate (MPR) at 6 per cent instead of raising it to 12 per cent, the 30 per cent figure we see today would be around the 50 per cent mark.

The spike in rates has led to government bonds crowding out corporate bonds since most investors, including pension fund administrators (PFAs) who were just warming to the idea of investing in corporate and most other bonds, opted for the attractive rates paid by FG bonds. The new CBN governor has hinted at a reduction of risk-free rates back to single digits. When this happens, I believe it will jumpstart interest in corporate and other bond issuance again.

Where do you see your contributions in the institutions you have established in the next 10 years?

I would like to see NMRC having had a major impact on the housing sector in Nigeria.

Who says we cannot finance 2 million units each year with multiple multiplier effects for the Nigerian economy? The demand is there. For DLM my vision is that it evolves into an institution like the Investment Banking and Trust Corporation. I have a lot of admiration for Atedo Peterside, who founded IBTC in 1989 at the age of 33.

In the early 1990s, I remember telling myself way back then, that if I did not get a job in London, I would return to Nigeria to work for IBTC. Today, we have many people who have had the opportunities and exposure of IBTC’s founder.

The question we should ask ourselves is whether we have created the types of interesting employment opportunities that would attract the best young talent in our domestic market and the Diaspora to want to return and be part of something magical?

With an ever growing population, we need to create more institutions that would absorb the bright young minds. DLM and NMRC should be among those institutions. If we don’t do it now, who will? This should be a burning desire for all able Nigerians of my generation. ;

VM4

MARKET DATA

VM | Monday, August 4, 2014 | Issue 004

MARKET SNAPSHOT 3-MONTH PRICE TREND OF BELLWETHER STOCKS

ACCESS

9.98 0.02

7.22

PE 6.35

11.14 0.38 3.96%

1YtD

3M

1.39 16.18%

0.02 0.20%

1W

23/07

May

June

July

CONTINSURE 0.93

T

-0.08 -6.67%

1YtD

3M

PE 7.00 0.00 0.00%

1W

23/07

May

June

July

FCMB 0.39 10.16%

3M

0.68 19.15%

0.02 0.48%

1W

23/07

May

June

GUARANTY 22.67

July

T

0.86 3.10%

1YtD

3M

1.61 5.96%

PE 8.82 -1.49 -4.95%

1W

23/07

May

June

July

MANSARD

T

0.05 2.00%

1YtD

3M

0.35 15.91%

-0.12 -4.49%

1W

23/07

May

June

OANDO

July

T

0.27 1.01%

1YtD

3M

11.35 72.52%

1.01 3.89%

1W

23/07

May

June

STANBIC

T

3M

8.68 38.89%

3.50 12.73%

1W

23/07

May

June

July

UBA -1.66 -18.14%

3M

0.59 8.55%

-0.40 -5.07%

1W

June

-13.40 -5.64%

1W

July

FIDELITYBK 1.85

T

3M

PE 2.96 -0.03 -1.47%

1W

23/07

May

June

GUINNESS 162.00

T

3M

19.59 11.49%

-7.90 -3.99%

23/07

May

June

MOBIL

T

44.22 38.12%

3M

40.22 33.52%

-9.68 -5.70%

1W

23/07

May

June

OKOMUOIL 32.15

T

3M

-0.44 -1.29%

1.26 3.88%

23/07

May

June

TOTAL

T

3M

18.86 12.32%

-13.73 -7.39%

1W

23/07

May

June

UNILEVER 42.50 1YtD

July

T

-3.75 -7.08%

3M

1.08 2.24%

FLOURMILL 63.91

1.15 2.39%

-0.37 -5.51%

1W

July

T

3M

9.66 14.20%

3.63 4.90%

23/07

May

June

July

HONYFLOUR 2.56

T

0.33 8.57%

1YtD

3M

0.46 12.37%

-0.10 -2.34%

23/07

May

June

NASCON

T

-4.73 -31.85%

3M

-1.24 -10.92%

-0.38 -3.62%

1W

23/07

May

June

PRESCO

T

-2.17 -5.56%

3M

-1.29 -3.38%

-1.17 -3.08%

1W

23/07

May

June

UACN

T

3M

13.46 28.91%

-2.17 -3.49%

1W

23/07

May

June

WAPCO

T

5.00 4.35%

3M

12.00 11.11%

2.00 1.69%

1W

June

FO

July

T

136.03 146.47%

1YtD

3M

94.42 70.21%

4.67 2.08%

1W

23/07

May

June

INTBREW

T

-2.22 -7.84%

3M

1.39 5.63%

-0.55 -2.06%

1W

23/07

May

June

NB

July

T

19.99 12.11%

1YtD

3M

34.00 22.52%

6.80 3.82%

1W

23/07

May

June

PZ

July

T

1.00 2.71%

1YtD

PE 29.10

45.98 3M

2.00 5.56%

-0.80 -2.06%

1W

23/07

May

June

T

PE 7.76

21.31 3M

-3.01 -15.32%

-1.49 -8.23%

1W

23/07

May

June

ZENITHBANK 19.23

July

T

3M

01/08

F W T

F

25.05 0.10 PE 7.24

27.40 0.05 0.20%

1YtD

-4.15 -5.93%

3M

23/07

July

T

01/08

F W T

F

23/07

May

June

July

T

01/08

F W T

F

23/07

May

June

July

T

2.12 9.25%

01/08

F W T

F

0.10 0.40%

1W

23/07

May

-0.16 -0.24%

1W

July

JBERGER

T

1.66 2.69%

3M

-0.61 -0.95%

1W

23/07

May

June

July

NESTLE

T

1250.01 -76.90 -6.51%

01/08

F W T

27.83 2.58%

3M

PE 38.37 -0.10 -0.01%

1W

23/07

May

June

July

SEPLAT

T

01/08

F W T

PE --

735.00 38.20 6.32%

13.00 2.06%

3M

-37.00 -5.44%

1W

23/07

May

F

643.00 37.00

590.00 1YtD

F

1105.10 0.10

916.00 1YtD

F

PE 9.35

76.45 0.32 0.50%

01/08

F W T

63.39 0.61

59.18 1YtD

F

PE 21.68

23/07

June

June

July

T

01/08

F W T

F

1. 52-week low price 2. Year low price 3. Current price 4. Year high price 5. 52-week high price 6. Current price 7. 5-day price change 8. PE ratio 9. 1-year price change 10. 3-months price change 11. 1-week price change 12. Daily price movement over 3 months.

13. 30-day moving average 14. Daily price movement over last week

1 2 TICKER

4

3

19.23 1YtD

5

25.23 0.018

June

July

T

01/08

F W T

F

PE 7.29

27.406 0.23 0.92%

3M

2.90 12.99%

7 0.01

1W

0.04%

10

12

June

01/08

F W T

65.85 0.16 -2.22 -3.26%

9

May

T

74.97

May

F

16.61 1.49

12.00 1.23 8.03%

July

58.50

01/08

F W T

-1.11 -7.16%

LEGEND

UAC-PROP 1YtD

July

June

GLAXOSMITH 1YtD

F

PE 6.67

1W

23/07

May

F

38.00 0.80

30.08

0.60 4.35%

3M

01/08

F W T

01/08

F W T

17.37 -1.90 -11.66%

1YtD

T

14.40 1.11

11.50

F

PE 34.42

189.00

July

01/08

F W T

185.00 6.80

140.00

June

FBNH

F

PE 42.28

31.50

0.72 5.43%

1W

01/08

F W T

26.10 0.55

17.98 1YtD

July

4.99 55.44%

3M

23/07

May

F

PE 49.41

259.94

2.00 16.68%

1YtD

PE 12.50

14.87

01/08

F W T

228.90 4.67

35.00

F

PE 14.81

136.73

-0.03 -0.18%

1W

01/08

F W T

120.00 2.00

87.50 1YtD

July

3.87 29.77%

13.99 0.72

8.00

F

PE 4.60

23/07

May

F

PE 28.47

67.85 4.03 7.19%

3M

01/08

F W T

60.02 2.17

42.58 1YtD

July

0.48 2.93%

CCNN

01/08

F W T

18.52

1YtD

F

PE 4.42

49.00

T

01/08

F W T

36.83 1.17

32.00 1YtD

July

July

16.87 0.03

12.40

F

PE 9.64

15.10

0.3 0.76%

1W

01/08

F W T

10.12 0.38

10.07 1YtD

July

June

ETI

F

PE 12.29 1W

0.00 0.00%

01/08

F W T

4.18 0.10 4.50

3M

23/07

May

F

PE 22.98

1W

-7.98 -16.63%

1YtD

PE 23.30

51.66

01/08

F W T

77.67 3.63 92.00

-12.33 -13.70%

1YtD

F

PE 35.94

1W

June

01/08

F W T

49.25 1.15 65.00

0.07 1.11%

40.00 0.30

35.96

F

PE 3.84

23/07

May

F

PE 13.28

195.50 -1.30 -0.75%

3M

CAP

01/08

F W T

6.35 0.37

01/08

F W T

172.00 13.73

146.26 1YtD

July

T

8.20 -1.15 -15.33%

1YtD

F

PE 14.51

1W

July

01/08

F W T

33.76 1.26 48.05

-11.07 -24.69%

1YtD

July

5.86

F

PE 15.33

178.84

0.00 0.00%

1W

01/08

F W T

160.22 9.68

102.00 1YtD

July

June

DIAMONDBNK

F

PE 24.62

1W

-0.76 -1.07%

01/08

F W T

190.10 7.90 266.70

-45.91 -19.45%

1YtD

July

3M

23/07

May

F

2.01 0.03 0.11 5.79%

-26.64 -27.42%

1YtD

PE 47.293

110.00

01/08

F W T

3.05 -0.69 -25.56%

1YtD

F

PE 4.41

9.60

-1.90 -0.84%

01/08

F W T

7.49 0.40

6.65 1YtD

T

3M

70.54 0.00

67.8

F

PE 19.50

23/07

May

F

PE 16.13

31.50 8.66 38.76%

7.94 3.67%

CADBURY

01/08

F W T

224.10 13.40

01/08

F W T

31.00 3.50

15.51 1YtD

July

T

250.02

1YtD

F

PE 24.22

36.89

July

01/08

F W T

27.00 1.01

9.32

DANGCEM

F

PE 16.68

2.73

3.11 10.40%

1W

01/08

F W T

2.55 0.12

1.95

June

185.00

F

28.61 1.49 31.80

14.82 81.52%

01/08

F W T

PE 41.25

23/07

May

F

PE 4.81

4.59

3M

01/08

F W T

4.23 0.02

3.01 1YtD

T

33.00 3.11 34.17

11.12 50.82%

1YtD

F

1.12 0.00 0.10 9.80%

13.87

01/08

F W T

1.33

ASHAKACEM

11 14

13 May

21/07

June

July

25/07

M T W T

F

MARKET DATA

VM | Monday, August 4, 2014 | Issue 004

VM5

MARKET SNAPSHOT +150% SLIPPING +140%

LEADING

# TICKER

WTD

YTD

1 DANGCEM

-5.64

3.67

2 NB

3.82 12.11

3 NESTLE

-0.01 -6.51

4 GUARANTY

-4.95

3.10

5 ZENITHBANK

0.40

0.20

6 FBNH

-7.16 -11.66

7 WAPCO

1.69

8 STANBIC

12.73 38.76

9 GUINNESS

-3.99 -19.45

+70%

10 ETI

-0.18

+60%

11 FO

2.08 146.47

12 UBA

-5.07 -18.14

13 OANDO

3.89

1.01

14 ACCESS

0.20

3.96

15 TRANSCORP

3.57 26.96

16 UNILEVER

2.39

17 FLOURMILL

4.90 -13.70

18 PZ

-2.06

19 UBN

-6.22 -12.07

11

+130%

The relative size of each individual stock’s bubble chart is determined by its market capitalization.

For indices, the relative size of each bubble chart is the total value of the capitalization modified values of each constituent stock.

+120% +110% +100% +90% YEAR-TO-DATE RETURN

+80%

28

+50%

27

+40%

8

32

+30%

15

+20% +10% 0%

1

30

21

4

18 36

-10%

6

19

23

-20%

12

26

9

355

-40% LAGGING -10%

7 34

5

13 16 17

38

22 31

-30%

10 14 29 3

33 24

2

25

39

27

20

40

-5%

0%

5%

IMPROVING +15%

+10%

WEEK-TO-DATE RETURN

Indices

YtD, %

ASI

-0.83% -0.39%

NSE30

-1.03% -0.42%

NSEBNK

-3.22% -1.36%

NSEINS

-0.65% -0.01%

NSECNSMRGDS

0.14% -0.21%

NSEOILGAS

3.93% 0.36%

WtD, %

TRADING BREAKDOWN

BY SECTOR

DtD, %

Sector 1.46%

%

Financial Services

76 \ 56

Conglomerates

8 \ 17

Oil & Gas

6\8

Others

10 \ 19

0.33%

-4.54%

FGN Bond Index -3.34%

-4.04%

38.73%

-0.78%

NSELOTUSISLM -0.27%

-2.51%

0.41%

NSEINDUSTR 0.44%

2930

12.8

Market Value YTD Return

12.7

2924 2918

12.6

2912

12.5

7.02%

-5%

-3%

0%

3%

5%

2906 12.4 24/07 30/07 01/08

7%

GLOBAL INTEREST RATES & INFLATION TARGETS Central Last Date % Inflation Rate Bank Change Change Target China 6.00% 05.07.2012 -0.31 4.00% Japan 0-0.10% 05.10.2010 -0.20 2.00% UK 0.50% 05.03.2009 -0.50 2.00% USA 0-0.25% 16.12.2008 -0.75 2.00% Eurozone 0.15% 05.06.2014 -0.10 <2.00% Brazil 11.00% 02.04.201 +0.25 4.5% +/-2.0% Canada 1.00% 20.07.2010 +0.25 2.0% +/-1.0% Egypt -0.50 8.25% 05.12.2013 India 8.00% 28.01.2014 +0.25 Indonesia 7.50% 12.11.2013 +0.25 4.5% +/-1.0% Malaysia 3.25% 10.06.2014 +0.25 Mexico 3.00% 06.06.2014 -0.50 3.00% +/-1.0% Morocco 3.00% 28.03.2012 -0.25 Nigeria 12.00% 10.10.2011 +2.75 6.00% - 9.00% Qatar 4.50% 10.08.2011 -0.50 Russia 8.00% 28.07.2014 +0.50 5%* Thailand 2.00% 12.03.2014 -0.25 0.5% - 3.0% Turkey 8.75% 24.06.2014 -0.75 5.00% * +/- 1.5 pct point uncertainty band

Date

Deals

Turnover Value

Traded Stocks

Declined Stocks

Unchanged Stocks

All Shares Index Value

1

24.07.2014

113

22

39

52

42,529.74

2

25.07.2014

113

25

30

58

42,285.82

3

30.07.2014

5,830

713,842,101

6,727,979,195.42

119 \ 112

29 \ 29

29 \ 36

61 \ 47

42,368.99

4

31.07.2014

6,248

354,760,258

6,912,884,935.90

118 \ 51

24 \ 5

34 \ 1

60 \ 45

42,097.46

5

01.08.2014

4,997

276,500,149

5,939,306,763.98

103 \ 116

19 \ 23

36 \ 40

48 \ 53

41,934.40

The \ arrow signifies week-on-week change in value. This week’s value is shown on the left of the \ sign, and last week’s value on the right.

Index

Week Opening

Week Close

Change

WtD

MtD

QtD

YtD

1

All Shares Index

42,285.82

41,934.40

-351.42

-0.83

-0.39

-1.29

1.46

2

NSE 30 Index

1,933.21

1,913.38

-19.83

-1.03

-0.42

-0.95

0.33

3

NSE Banking Index

441.72

427.51

-14.21

-3.22

-1.36

-1.24

-4.54

4

NSE Insurance Index

148.73

147.77

-0.96

-0.65

-0.01

0.64

-3.34

5

NSE Consumer Goods Index

1,054.31

1,055.79

1.48

0.14

-0.21

-0.23

-4.04

6

NSE Oil/Gas Index

453.72

471.53

17.81

3.93

0.36

0.7

38.73

7

NSE Lotus Islamic Index

2,813.19

2,791.18

-22.01

-0.78

-0.27

-2.9

-2.51

8

NSE Industrial Index

2,714.02

2,725.26

11.24

0.41

0.44

2.2

7.02

2.71

0.00 -27.42 -3.49

22 DANGSUGAR

-2.59 -20.27

23 DIAMONDBNK

-5.51 -15.33

24 INTBREW

-2.06 -7.84

7.19

25 FCMB

0.48 10.16

26 JBERGER

-0.95

27 ASHAKACEM

10.40 50.82

28 7UP

6.97 57.29

29 GLAXOSMITH

-0.24 -5.93

30 TOTAL

-7.39 -0.75

31 FIDELITYBK

-1.47 -25.56

32 MOBIL

-5.70 38.12

33 STERLNBANK

-2.54 -8.00

34 CONOIL

1.64

35 SKYEBANK

-5.94 -33.26

36 PRESCO

-3.08 -5.56

37 OKOMUOIL

3.88 -24.69

38 CAP

0.76 -16.63

39 NEIMETH

-1.67

40 MAYBAKER

-5.75 -35.69

NSEASI

41,934.40

0.50

1.08

7.27

42,60 42,42 42,24 42,06 41,88 Th

Fr

S&P 500

We

Th

Fr

1,925.15

1,980 1,965 1,950 1,935 1,920 Fr

Mo

Tu

FTSE 100

INDEX PERFORMANCE

-7.08

21 UACN

We Advanced Stocks

2.93

20 CADBURY

MARKET SNAPSHOT Turnover Volume

4.35

We

Th

Fr

6,791.55

6,810 6,775 6,740 6,705 6,670 Fr

Mo

Tu

JSE FTSE

We

Th

Fr

51,396.07

52,26 52,04 51,82 51,60 51,38 Th

Fr

Mo

Tu

We

Th

VM6

BUSINESS

VM | Monday, August 4, 2014 | Issue 004

TAKEOVERS

Now the real work begins

Obiora Onyeaso obiora.onyeaso@customsstreet.com

JULY 30, OANDO Energy Resources, the Toronto Stock Exchange-listed company majority owned by Oando (94.6%), announced it had closed the deal to acquire the Nigerian assets of

ON

Billions NGN

700

Sales Operating profit Net income Operating Margin Net Margin

7%

600

6%

500

5%

400

4%

300

3%

200

2%

100

1%

0

2011

2012

2013

2014e

2015e

0%

2016e

Source: Thomson Reuters

% Changes in Oando Share Price vs. NSEOILGAS Index OANDO price change

NSE OILGAS Index change

10.0% 7.5% 5.0%

457.15 471.53

2.5% 0% -2.5% -5.0%

27.00

28.5

02/07 08/07

14/07

18/07

24/07

01/08

Source: Nigerian Stock Exchange

Oando target price consensus revisions

5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0

40 35 30 25 20 15

Target Price

ConocoPhillips for $1.65 billion. The deal will push up the company’s oil production to about 50,000 barrels of oil per day from the current 5,000 bopd. FCMB Capital Markets was the lead arranger on the transaction.

The firm has built a strong reputation for major energy sector deals in Nigeria. In 2013 it arranged a $225 million loan for Accugas Limited, a subsidiary of Seven Energy, to finance the construction of a central processing facility and second gas pipeline project in Akwa Ibom.

Industry insiders confide that Oando offered to pay a significant premium to competing bids submitted

by Seplat, Lekoil, and the Midwestern/Transcorp

Oando Income Statement History and Forecast

Jan’13 Feb’13 Mar’13 Apr’13 May’13 Jun’13 Jul’13 Aug’13 Sep’13 Oct’13 Nov’13 Dec’13 Jan’14 Feb’14 Mar’14 Apr’14 May’14 Jun’14 23/07/14 30/07/14

Source: Forbes.com

purchase assets have expanded exponentially, buying assets worth $5bn from divesting multinationals including Royal Dutch Shell, Total of France, Eni of Italy, Chevron and ConocoPhillips signaling a retreat from Africa’s largest oil producer. These indigenous companies will account for nearly a quarter of the country’s oil production, or about 600,000 barrels of oil per day, by 2020. At present, they produce a marginal 10 per cent.

The length of time taken to complete the deal exposed the challenges faced by Nigerian companies when attempting to swallow large, costly assets. Oando financed the acquisition with an equal mix of debt and equity. The lofty valuation, rich forecasts and complex financial engineering expose the company to risks that may impair its ability to reward equity owners for some time to come.

Apart from the lengthy duration it took to raise the financing, the company also experienced delays in winning the approval of Dr. Diezani Allison-Madueke, the petroleum minister. Her approval was only received in June.

All the hurdles are in the past.

In a press release issued by the company, Tinubu proudly declared that the company would continue to ‘play a pivotal role in the consolidation, growth, and development’ of the Nigerian oil and gas industry, and that his team will ‘continue to seek strategic opportunities that provide a platform for enhanced growth and value creation for our stakeholders.’ It looks like he is determined to slough off insinuations that he has a ‘bid ’em up’ bug. When asked by a Reuters reporter if the company plans to bid for the OML 138 block that Total has pt up for sale, he recoiled. ‘It’s a good asset but the price is quite high. $24 per barrel, I think it’s a bit too expensive.’

Number of Estimates

Wale Tinubu, CEO, Oando, the man with the golden smile

consortium in order to win the assets. Analysts point out that the company had little choice if it planned to grow its upstream portfolio as the number of assets being offered for sale by oil majors is shrinking. Add to this that the federal government has shown that it is in no rush to conduct regular and transparent bid rounds.

It has been a two-year long marathon of starts and stops to get to this point for Oando, which has now successfully transformed itself from the largest downstream operator to a serious player in the country’s upstream sector.

By the transaction, Oando becomes the beneficial owner of Phillips Oil Company Nigeria Limited’s 20 per cent non-operating interest in the onshore oil mining leases (OMLs) 60, 61, 62, and 63.

It would also take ownership of the related infrastructure and facilities in the joint venture with the Nigerian Agip Oil Company Limited (NAOC JV). Offshore, Oando would receive Conoco Exploration and Production Nigeria Limited’s 95 per cent operating interest in OML 131, and Phillips Deepwater Exploration Nigeria Limited’s 20 per cent non-operating interest in oil prospecting licence (OPL”) 214. In June 2014, the Honorable Minister of Petroleum Resources for Nigeria approved the conversion of OPL 214 to OML 145 for an initial period of 20 years.

Wale Tinubu, Oando’s chief executive, who is admired for staying hungry and ambitious in spite of winning several laurels and accumulating a sizeable personal wealth, must now convince investors that he has what it takes to take the new Oando from potential to promise.

According to the Financial Times, over the past 5 years indigenous companies like Oando, Seplat, Shoreline Natural Resources and Seven Energy have paid $5 billion to

10 Highest Target Average Target Number of estimates Unchanged Number of estimates Upgrading

Lowest Target

Source: Thomson Reuters

Such statements must be reassuring to Oando’s shareholders and bankers.

After the clinking of cham-

pagne flutes, the real work begins if this acquisition is avoid the fate of a Pyrrhic victory. ;

SPOTLIGHT

Senator Udo Udoma, Lawyer, Corporate titan ENATOR UDOMA Udo Udoma, CON, 60, is the senior partner of Udo-Udoma & BeloOsagie, a thriving commercial law firm he founded in 1983.

From 1999 to 2007, he was a member of the Nigerian Senate.

Senator Udoma, whose father served on the Supreme Court for 13 years, specializes in advising clients on Nigeria’s investment laws with a focus on the petroleum, energy and natural resources sectors.

S

His counsel is also sought on company law, corporate restructuring, mergers and acquisitions and the raising of financing in the capital and money markets.

The graduate of St. Catherine’s College, Oxford University served for two years (19911992) as the pioneer chairman of the Corporate Affairs Commission. From 1993 to March 1994 he was the Special Adviser to the Minister of Petroleum and Mineral Resources.

Since January 2010, Sena-

tor Udoma been the chairman of UAC of Nigeria Plc where he owns a beneficial interest of 24,063,132 shares (1.25 per cent) according to proxy filings. He has been on the conglomerate’s board since 1995.

He has also been a member of the board of Unilever Nigeria since January 2008.

In June 2008, the former lawmaker, whose great-great grandfather founded IkotAbasi in modern-day Akwa Ibo state, was appointed as the chairman of the Securi-

ties and Exchange Commission of Nigeria. In February 2010, Senator Ganiyu Solomon criticized him for retaining roles on the boards of quoted companies at the same time as serving as the chairman of the board of the SEC. He believed the risk of conflicts of interest made his position untenable. In his defence, the SEC chairman explained that he was not an executive chairman, and that he had ‘served on the board of the company prior to my appoint-

ment as chairman of SEC and had declared it, as required by law.’

In April 2010, Senator Udoma joined the board of First Hydrocarbon Nigeria.

The company was founded in 2009 by Afren in partnership with FCMB and GTBank to take advantage of opportunities open to indigenously— controlled oil companies.

Senator Udoma has been the chairman of board of Union Bank of Nigeria since February 2013. ;

COMMENTARIAT

VM | Monday, August 4, 2014 | Issue 004

VM7

CORPORATES

TRANSPARENCY

The ‘Bayo-sphere’ keeps expanding

Afren’s canaries in the coal mine

Adebayo Ogunlesi

After two years on its board, Adebayo Ogunlesi has been named as the lead director of Goldman Sachs, the investment bank. He replaces James Schiro, who is retiring for medical reasons.

This is a first for Wall Street as Ogunlesi’s selection marks the first time a person of Afri-

can descent would occupy the position at a global financial institution.

Although his appointment has been welcomed by many, two questions have since been raised about his qualification and his authority. Ogunlesi, a distinguished investment banker and founder of Global Infrastructure Partners, has never run a public company.

Normally, chairmen of major US corporations have several years of chief executive, or at least, c-suite experience before nomination as chairmen.

Governance experts have also criticized the retention of the chairman title by Lloyd Blankfein, the bank’s chief executive.

The Sagamu, Ogun indigene has a proud pedigree.

His father, Emeritus Professor

Theophilus Oladipo Ogunlesi, OFR, was the first Nigerian professor of medicine. He attended Kings College, Lagos and Oxford University, where he bagged a first class degree in Philosophy, Politics and Economics, before proceeding to Harvard Business School to earn a JD and MBA from its Law and Business Schools respectively.

While at Harvard Law School, Ogunlesi also enrolled at the business school to overcome his fear of numbers. The new lead director once told an interviewer that the reason he enrolled at business school was to overcome his fear of numbers. ‘I was a guy who never really liked numbers in school. I was never any good in math.’ ;

of Nigeria (ABCON) had lobbied to extend the deadline by 40 weeks to no avail.

Pabina Yinkere, head of research at Vetiva Capital Management, told Bloomberg that the CBN directive is ‘aimed at reducing the speculative demand for foreign exchange over the election cy-

cle,’ and would be a ‘positive for the currency if properly implemented, and if successful, could prevent an aggressive tightening of monetary conditions.’

Alhaji Gwadabe announced on Friday that over 70 per cent of ABCON’s members failed to meet the deadline. ;

REGULATION

Pens up!

The Central Bank of Nigeria’s deadline for bureaux de change to raise their capital base to N35 million from N10 million by July 31 has passed. The forex dealers under the auspices of the Alhaji Aminu Gwadabeled Association of Bureaux De Change Operators

Foreign reserves rising Latest figures available from the CBN website show that the country’s foreign exchange reserves rose to $38.94 billion. In a communiqué issued at the end of its July monetary policy committee (MPC) meeting,

the central bank noted that the uptrend in reserves was ‘mainly due to increased accretion and moderation in the rate of depletion.’

According to Reuters, the naira has ‘remained stable at around 161-162 to the dollar

on the interbank market and 155.75 on the official window, on the back of support from dollar sales by some energy companies and offshore investors buying local debt.’ ;

Nigeria’s Foreign Reserves and US$/N Exchange Rate $50B

155.6N $/N Exchange Rate 155.5N CBN Foreign Reservers and Rates 155.4N

$45B 155.23

155.3N 155.2N

$40B

155.1N $35B

38,942,868,287

07’13

09’13

11’13

01’14

03’14

04’14

06’14

155.0N

The oily road to going public At its quarterly CEO Dinner held last week with the theme ‘The Role of the Capital Market in Unlocking Value in the Oil and Gas Sector’, the Nigerian Stock Exchange reminded privately held companies of the benefits of being listed. There is a growing call for more companies in the commanding

heights of the economy to sell shares to the public.

Many owners of companies operating in the sector readily admit that the long-term capital an initial public offering brings would be welcome.

They also recognise that it can be a poisoned chalice. Their reticence comes from a perception that the investing public

has a limited understanding of their businesses, investment patterns, and cash flows.

A director at an indigenous oil and gas company has privately suggested that the NSE needs to do more work convincing the buy-side, especially institutional investors, role they can play in attracting them to the market. ;

Source: arabianoilandgas.com

Worker at Afren’s Barda Rash field.

The company paid $588 million for the Iraqi asset in 2012

FREN, AN INDEpendent oil and gas exploration and production company operating in Africa and the Middle East whose founders included the recently deceased Rilwan Lukman, a former petroleum minister, has temporarily suspended its chief executive officer, Osman Shahenshah, and chief operating officer, Shahid Ullah, following initial findings of an independent review by Willkie Farr & Gallagher, a law firm appointed by the board. The news provoked panic selling of its shares. The company’s market capitalization shrunk from £1.6 billion to £1.2 billion in the aftermath of the news on Thursday.

In a terse statement issued Thursday, the FTSE 250 company said that ‘in the course of review of the potential need for disclosure of certain previous transactions to the market, evidence has been identified of the receipt of unauthorised payments potentially for the benefit of the CEO and COO.’ The statement goes further to clarify that these payments were not made by Afren and that it ‘has not found any evidence that any other Board members were involved.’

Canaccord Genuity, a UK-registered brokerage, wrote in a note that the suspensions ‘raise plenty of questions which are unlikely to be answered in the near term.

Afren’s corporate governance reputation has not been amongst the best in the sector, and investor scepticism in some quarters would appear to have been vindicated by today’s news.’ It does not find the non-implication of directors assuring either since ‘we have been unable to find out if this also means no-other employees are involved.’

Egbert Imomoh, a board member and former deputy managing director of Shell Petroleum Development Company (Nigeria), has been named as the executive chairman, and Toby Hayward, who until now was the senior independent director, as interim chief executive.

Last year, 30 per cent of

A

shareholders voted against the retention of Imomoh as chairman at its annual general meeting. They also rejected a generous pay package for the suspended CEO. The revolt was sparked by Afren’s decision to raise its stake in First Hydrocarbon Nigeria, a company it set up in 2009 in partnership with First City Monument Bank Plc and GTBank as vehicle for winning business in Nigeria. The company initially owned 44.4 per cent of FHN, and decided to raise its stake to about 80 per cent. It paid $105m for the additional equity. It also struck a deal that allows it to purchase a further 12.5 per cent in FHN at $3.32 a share in 2015.

What later became clear was that Imomoh, and the suspended executives had purchased a 15 per cent stake in FHN at $0.13 per share for a total cost of $1.3m. These shares were sold at the end of May last year at $2.47 per share, a whopping 1,800 per cent return on the original price paid. Shareholders were upset that the directors’ stakes in FHN was not disclosed until

then. That compounded concerns about governance practices at Afren.

At least one source has said that it is not unthinkable that the suspensions are linked to a power play following the passing away of Rilwan Lukman.

With Lukman’s passing, there are plenty of knives out in Nigeria and so perhaps it should not be that surprising that an internal investigation has quickly revealed payments to Shahenshah and meant that he has been suspended.

Investors can get some comfort that the company, which has operations in eleven countries as far-flung as Kurdistand and Ethiopia, is doing well.

Last year, the company produced about 47,112 barrels of oil per day. Its 2014 production target was revised downward to 40,000. In its first quarter results of the year, it said that it had only been able to produce 35,465 barrels of oil per day.

The company has postponed the publication of its half year results from August 4 to no later than the end of the month. ;

Afren’s Nigerian operations Nigeria

Working Interest

Local Partner

Ebok

100%/50%a

Oriental

Okoro Setu

50%

Amni

OML 26

45%c

FHN

OPL 310

40%d

Optimum Petroleum Development Ltd

OML 113

16.875%e

FHN

Okwok

70%/56%f

Oriental Addax Petroleum (Nigeria Offshore)

OML 115

100%/50%g

Oriental

b

Source: Afren

Notes: a- working interest pre/post cost recovery b - working interest post cost recovery. c - held through FHN,a subsidiary of Afren plc d - 40% economic interest (following completion of farm out and subject to Nigerian Ministerial Consent). e - Held through FHN, a subsidiary of Afren plc, post cost recovery economic interest f – 70% pre cost recovery effective working interest 56% post cost recovery effective working interest (subject to gross volumes lifted). g - 100% pre cost recovery effective working interest; 50% post cost recovery effective working intererest.

VM8

ARENA

VM | Monday, August 4, 2014 | Issue 004

ART AS AN ALTERNATIVE INVESTMENT

An Artist’s Dossier: Yusuf Grillo

Oliver Enwonwu is the director of leading Lagos gallery, Omenka and president of the Society of Nigerian Artists. oliver@omenkamagazine.com

TERM, ‘OLD MASters’ generally refers to the most recognized European artists—mostly painters, working between the Renaissance and 1800. In modern times, a Master describes an artist usually advanced in age with recognition gained over extensive years of practice.

In contrast, the ‘emergent artist’ is part of a more recent era and lacks a certain appeal and value which time endows his work. An analysis of auction results reveals that the Masters have recorded about 70 per cent of the highest prices in Nigeria in the past 5 years.

In this article, we will ana-

The

lyze auction results for widely acknowledged Master, Yusuf Grillo, as well as an indication of future values.

Yusuf Adebayo Grillo was born in Lagos, Nigeria in 1934 and studied at the Nigerian College of Arts, Science and Technology, Zaria from 1955 to 1960. The following year, he earned a postgraduate teacher’s certificate. In 1958, together with his contemporaries at Zaria, Grillo founded the Zaria Art Society, famous for its theory of Natural Synthesis, which sought to merge Western techniques and conventions of representation with indigenous Nigerian traditions.

Much of Grillo’s legacy rests on his achievements as an educationist. A leading member of the Yaba figurative school, he served for many years as the director of the School of Art, Design and Technology of the Yaba College of Technology. He was the first president of the Society of Nigerian Artists, and served for over sixteen years from inception in 1964.

Grillo is well-known for his distinctive style which adopts the geometric planes of classical African sculpture and the rich blue hues of traditional Yoruba textiles as exemplified

Yusuf Grillo, African Woman with Gele, oil on canvas, 92.5 x 91.5cm

Work Details

Date Sold

Amount

African Woman with Gele, 1975 oil on canvas 92.5 x 91.5cm

21 May 2014

Sold for £80,500 inc. premium (N17,879,000)

The Flight,1972 oil on board 122 x 122cm

21 May 2014

Sold for £62,500 inc. premium (N13,881,200)

The Blue Madonna, 1965 oil on composition board 119.5 x 51cm

21 May 2014

Sold for £50,000 inc. premium (N11,105,000)

Mother - IYA series oil on board 111.5 x 45.5cm

21 May 2014

Sold for £43,750 inc. premium (N9,716,840)

Sabada, 1964 oil on board 113 x 54cm

10 March 2010

Sold for US$ 57,950 inc. premium (N8,590,740)

by Blue Moon, a 1966 oil on board painting estimated at N89.5 million ($66,670-79,170) and sold for N8.8 million ($58,666) in November 2008 at Arthouse Contemporary.

This remains the record for any Grillo sold in Nigeria, erasing the earlier record for Humana set in 2006, an oil on board, which sold for N6.05 million ($40,000) at Arthouse Contemporary in 2008.

Grillo is one of Africa’s most influential modernist painters and the value for his paintings continues to rise on the international market.

Leading international auction house, Bonhams, has featured Grillo in several auctions with his highest selling work African Woman with Gele fetching £80,500 including premium in its May 2014 Africa Now sales. The work had a pre-sale estimate of £30,000 to £50,000.

The table below shows the 5 most expensive works by Grillo sold at Bonhams, an auction house. The results show a steep rise in sales from 2010 to 2014, which will hopefully boost collector confidence in acquiring works by the artist. ;

HIGH TABLE

The Mattar at hand (1)

Ify Oji is a lawyer, writer and food lover. She is the creator of the GidiTang.com (synonym: Lagos Flavour) blog on food and drink in Lagos. teamlogiclimited@gmail.com

IS THE END OF charity season and the dry season in Gidi. What a paradox. This culminates in the famous, eagerly awaited Small World event traditionally held on the nearest Saturday to the 18th of February. The event

IT

has held every year since 1996.

It was started by a group of expatriate women living in Nigeria who were motivated to give something back to the country that had received them so well. These ladies believed that they could, through association, raise funds to support local charities. Beginning as a cosy, indoor food fair with 300 guests, it has grown to become a boisterous outdoor festival with over 3,000 people attending this year.

I have been selected as a member of the Organizing Committee with responsibility for on-ground duty. This is a euphemism. In reality, the matrons have Shanghaied me for the task. How can I say no?

Since I started running my own company I am stretched thin. Time is a scarce commodity for me. But ‘Befehl ist Befehl’ (German: orders are orders). So I comply without audible complaint. On

Published by

the day, I grudgingly make my way to the event venue at British International School, Lekki.

Although refreshments will be brought by assigned women to the grounds, I look forward to a self-rewarded lunch at Caffé Vergnano 1882. The café is at the Palm’s Shopping Centre, a stone’s throw away from where the event is taking place.

Afternoon supervisory duty is no cake walk. After a few hours, I am knee deep in sand, simultaneously taking in new information on specifications and dimensions of the stage, deciphering a thick South African accent, holding the measuring tape on the waterthirsty field and calculating what would be adequate thoroughfare space for the expected traffic for hundreds of people. By noon my white silk office shirt is drenched and I am famished.

EDITOR: MIDENO BAYAGBON GROUP BUSINESS EDITOR: OMOH GABRIEL

In Association With

CONTENT DIRECTION: OBIORA TABANSI ONYEASO DESIGN & ILLUSTRATION: PUBLICAN MEDIA

Caffe Vergnano, an Italian franchise is part of the extensive Double Four Restaurant Group part owned by the Mattar family. For any child in Gidi of a certain age, a birthday at Double Four Restaurant on 44, Awolowo Road, Ikoyi was a right of passage literally. Their Knickerbocker glory sundae, Chicken escalope, and chicken livers were family favourites. They also pioneered the brick oven pizzas in Gidi. Pictures from my 12th birthday are documentary evidence of this fact.

The food at Caffé Vergnano echo the sentiments of a gone by era.

This is why I relish eating at what most would consider a cafe franchise whose focus is mainly on designer Italian Coffee. Because of the Mattar family backing, their kitchen is just as strong as their espresso machine.

The grilled chicken and

Caffe Vergnano cappuccino cups

mashed potato, an off the beaten menu contender, arrives in record time. I am a little disappointed that the fillet is skinless though the chicken is adequately moist. I miss the fact that the chicken is grilled with the skin side down - this was the case in the past - as this heightens the dish that can easily hold its own with any gastropub in England worth its salt.

Vanguard Markets features unbiased, in-depth coverage of corporate and market developments across a wide range of business sectors.

Every week, Vanguard Markets delivers essential business analysis and commentary on Nigerian companies, regional economies, and global markets.

Vanguard Markets is published by Vanguard Media Limited in association with Customs Street Advisors Limited, a specialist communications consultancy.

Source: torinobygnam.it

In the midst of savouring my meal, I receive a text from one of the ladies on the committee and I leave immediately after my meal. This matter on the Mattar gastro-dynasty is definitely not over. To be continued! ; Caffe Vergnano 1882 The Palms, Lekki

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Website: www.vanguardngr.com ISSN 0794-652X