CBN

CBN resumes $100m weekly sales for SMEs, school fees

by with No Comment Businessfinance

CBN resumes $100m weekly sales for SMEs, school fees… concludes plans to resume sales to BDCs

The Central Bank of Nigeria (CBN) on Wednesday said it had resumed $100 million weekly sales for school fees and Small and Medium Enterprises (SMEs).

READ ALSO: SMEDAN To Protect Intellectual Property For MSMEs

The CBN has also made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels, and other designated retail uses, as soon as international flights resume.

The regulator on March 26, suspended foreign exchange sales to the Bureau De Change (BDC) operators until further notice due to the Covid-19 lockdown as requested by the operators. The suspension notwithstanding, some BDCs are still active in the market.

This is in view of the gradual easing of the COVID-19 lockdown both globally and in Nigeria.

A statement signed by Isaac Okorafor, director, corporate communications department, reads “Central Bank of Nigeria (CBN) has resumed provision of foreign exchange to all commercial banks for onward sales to parents wishing to pay schools fees and SMEs wishing to make essential imports needed to revamp economic activities across the country. In particular, the CBN is resuming the provision of over US$100 million per week for both categories”.

With these actions, the CBN reiterated that it is adequately meeting the needs of all legitimate users, and its continued capacity to do so should not be in doubt.

There is therefore no need for panic by any end-user that could necessitate recourse to illegitimate sources and spike in foreign exchange rates, the CBN said.

Given this, the Bank has ramped up its surveillance of the foreign exchange markets for speculators, smugglers and other illegal users, and will take decisive actions against anyone/institutions involved in such nefarious activities.

Reacting to CBN’ action, Aminu Gwadabe, president of Association of Bureau De Change Operators of Nigeria (ABCON) said, “Yes, it is in line as our product is cash not digital currency and our clients are travellers. In line with our scope, we engage mostly personal travelling allowance and Buisiness travelling allowance which in all scenarios demand ticket visas of our customers”.

The Naira weakened further by N5.00k as one dollar traded at N460 at the close of business on Wednesday compared with N455 traded in the morning at the black market.

The local currency lost N0.20k at the close of business as the dollar traded at N386.45k on Wednesday as against N386.25k on Tuesday at the Investors and Exporters (I&E) forex window, data from FMDQ indicated.

Naira depreciated by N2 at the retail bureaus as the dollar was trading at N467 on Wednesday from N465 quoted on Tuesday.

Gwadabe said the assurances of the apex bank and the partial return of operations in the foreign exchange market will  ensure sanity and discourage frivolous demand and panic buying which pervades the market in recent times.

He said the BDCs will return as soon as lockdown in the international airport are relaxed.

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FBN QUEST

FBNQuest Recommends Commercial Papers and Bonds as Stable Funding Sources for SMEs and Corporates

by with No Comment Businessfinance

FBNQuest Merchant Bank, the investment banking and asset management group of FBN Holdings Plc, is recommending commercial papers and bonds to corporate issuers seeking to raise working capital, expansion capital, refinance expensive debt and better match their cash obligations with revenues.

READ ALSO: Mastercard To Buy Digital ID Firm Ekata For $850m

Speaking at the latest edition of the”Leading Conversations with FBNQuest” webinar series, Oluseun Olatidoye, Head Capital Markets, FBNQuest, noted that many companies do not take advantage of Nigeria’s growing commercial paper and bond market to access stable funds that match their capital needs.

“Even though interest rates have trended higher in the first quarter of this year, there is still significant scope for many companies to access cheaper and more stable funding from investors who are seeking well-run businesses with predictable cashflows to invest in” said Olatidoye.

The webinar with the theme ‘Funding through Commercial Papers and Bonds’ was hosted to engage corporates and investors on the opportunities within issuing and investing in commercial papers and bonds.

Other speakers included Sumit Jain, Senior Executive Director at Valency International, a leading food ingredient supply chain company. He echoed the sentiment about the benefits of issuing commercial papers.

“We believe that corporates can lower the interest paid on bank debts by up to 4 percentage points by issuing commercial papers. Loans also offer other tremendous benefits in the current macroeconomic environment” said Sumit Jain.

Nigeria’s capital market has recorded a flurry of corporate commercial papers and bond issues since a sharp decline in interest rates in the third quarter of 2020. “We think the market conditions have just cast the spotlight on a financing option that discerning companies should consider.

We look forward to working with our clients to navigate the process to issuing CPs and bonds and therefore unlocking the efficiency and convenience that these instruments offer” stated Olatidoye. 

As a leading investment banking institution, FBNQuest has advised on the issuance of several commercial papers transactions for organisations such as Valency Agro Nigeria Limited, Mixta Real Estate plc, Dangote Cement plc, Nigerian Breweries plc (NB), Lafarge Africa plc, Flour Mills of Nigeria plc (FMN), Wema Bank plc, and UACN Property Development Company plc (UPDC) to mention a few. 

These transactions add to the organisations impressive portfolio of organisations it has supported, and once again highlights its capabilities in the successful execution of sizeable capital market and commercial debt transactions.

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SME Fund

CardinalStone’s West Africa SME Fund Closes at $64M

by with No Comment Businessfinance

Lagos-based private equity fund manager CardinalStone Capital Advisers (CCA) has announced the final close of its maiden private equity fund, the CardinalStone Capital Advisers Growth Fund LP (CCAGF ) at US$64 million.

READ ALSO: CBN holds benchmark interest rate at 11.5%

The CCAGF is a generalist fund that makes equity investments of $5 million–$10 million in high-growth SMEs operating across a range of sectors including industrials, agribusiness, consumer goods and services, education, healthcare, and financial services.

CCAGF investors, which are a mix of commercial and development finance institutions include Kuramo Capital, the UK Government’s CDC Group, FMO – the  Dutch Entrepreneurial Development Bank, the International Finance Corporation (IFC, part of the World Bank Group), the Nigerian Sovereign Investment Authority (NSIA) and a number of high-net-worth individuals.

The Fund, which recorded its first close in December 2018 and final close in September 2020, was established to support the growth and institutionalisation of small and medium-sized enterprises (SMEs) operating in two of West Africa’s leading economies – Nigeria and Ghana. 

Private equity companies raise and manage funds that are invested in different sectors. The first step in raising funding is announcing and marketing the funding to potential investors. The initial closing refers to the period within which the first set of investors commit to putting money in the fund while the final close refers to when the last set of investors have committed to investing in the fund.

The CardinalStone Fund has invested in two businesses, iFitness Center Limited and AppZone Group Limited, and plans to invest in another 6-7 companies over the next 2 years.  

iFitness, a Nigeria-based fitness chain, operates with a mission of improving the overall health and well-being of the average Nigerian by providing high-quality, yet affordable fitness offerings.  Meanwhile, the fintech solutions provider, AppZone, provides a bouquet of financial services offerings.

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