1. There is no power, I am writing this by the light of the labtop
2. Not just is there no power, but the generator is on the blink. It turns itself off after 30minutes
3. It is hot. The windows are open but I am still sweating
4. My pet mosquitos are gearing up
5. I feel like I am in Apocalypse Now
6. I was working all weekend. When I wasn’t working, I was thinking about work
7. Its Sunday night, and I thought I would spend it reading up on more work but I can’t cos of no light
8. I am lonely
9. My family is missing me. My 7 yr old daughter is now at the point of crying for her daddy
10. My family is flying out in 3 weeks and there is no generator, cooker or airconditioning in the new house
11. I wanted to live a nice easy life in Abuja not Lagos and I didn’t want to work for a bank because they want your soul, but I’m now working in Lagos with a bank that wants to eat me for dinner
To console myself and stop myself from crying I shall repeat the following to myself
1. God is in control
2. No condition is permanent (as found on the back of tipper trucks)
3. It shall be well
4. The massive kids road block party going on since afternoon till now in a massive house up the road with massive bouncy castles and Lekki yummie mummies in attendance and all kinds of exotic cars parked on both sides of the road is the kind of party I shall be going to with my kids and missus once I have settled in (I hope)
Monday, 30 June 2008
The Rise of the Banks - Sat 28th June
The banks are rising. There is a movement from the public sector to the private sector. As people come to realize what a bad job the government has done managing our economy, there is asset relocation to the private sector. Guess who are the gate keepers to the private sector, the banks. All 24 of them. They are the new power brokers, the new inner caucus. They whisper in the ears of the politicians, the politicians that want to make sure they are still popularists. The politicians that must ensure they win the votes to stay alive. The banks tell them how to invest their money, how to build roads, schools, bridges. How to pander to the masses so that they can stay in power. They whisper “Public Private Partnerships”. “Let us manage the economy for you”,”We can deliver, you cannot”. The politicians nod their heads. “What do we want with the troubles of delivering electricity, roads, water, schools and retail parks”.Just give us a cut of the revenues, and all these things are yours”. The banks nod their heads wisely and rub their hands as they consider the 140 million Nigerians who will beg to pay for regular water for regular power for anything that is regular and efficient.
I was at a presentation on Friday. I was shown a new payment system that can be embedded in any environment that is payment based – taxes, custom revenues, retail collections, car tax discs, water rates etc etc etc. It was fantastic. I am told that Lagos State Government tax collections have quadrupled in a little over a year because of this new payment system. Instantaneous global rollout. Very low cost. But the impact is enormous. Payment is via the banks with an instantaneous check at any site to confirm that payment has been made. You pay your money, you collect your service. The powers that be will not allow their livelihood disappear without a fight. Nigeria is not known as one of the most corrupt countries in the world for nothing. The sums involved are huge and are not to be relinquished lightly. Think about it, no physical cash payment means no graft, no grey areas to hide, no cash exchanging hands for favors that circumvent the system. Nigeria is being dragged kicking and screaming into the harsh glare of the modern world of technology. Binary code knows no grey area. Either it is yes or no, and not “if you deliver this we can do that, God no go vex”. We pray that these new forces of change win and sweep away our corrupt ways of old.
I was at a presentation on Friday. I was shown a new payment system that can be embedded in any environment that is payment based – taxes, custom revenues, retail collections, car tax discs, water rates etc etc etc. It was fantastic. I am told that Lagos State Government tax collections have quadrupled in a little over a year because of this new payment system. Instantaneous global rollout. Very low cost. But the impact is enormous. Payment is via the banks with an instantaneous check at any site to confirm that payment has been made. You pay your money, you collect your service. The powers that be will not allow their livelihood disappear without a fight. Nigeria is not known as one of the most corrupt countries in the world for nothing. The sums involved are huge and are not to be relinquished lightly. Think about it, no physical cash payment means no graft, no grey areas to hide, no cash exchanging hands for favors that circumvent the system. Nigeria is being dragged kicking and screaming into the harsh glare of the modern world of technology. Binary code knows no grey area. Either it is yes or no, and not “if you deliver this we can do that, God no go vex”. We pray that these new forces of change win and sweep away our corrupt ways of old.
‘Get out of jail on Friday’ card - Fri 27th June
Thank God for the weekend!!!As I was leaving, my colleague showed me a meeting letter agreed for Sunday before 12 midday. I explained to him that if they are going to sack me, they may as well do it now, but my Sunday’s are for God and my family and not for work. No competition. He subsequently backed off and I subsequently went home to go and enjoy my weekend.
I have just come over to Lagos over the past couple of months and I didn’t know where to go to let off steam on a Friday evening. Abeg, if you know a nice place to go, nice food, nice people, nice entertainment, please let me know, so I can go let off steam after a week to die for.
I have just come over to Lagos over the past couple of months and I didn’t know where to go to let off steam on a Friday evening. Abeg, if you know a nice place to go, nice food, nice people, nice entertainment, please let me know, so I can go let off steam after a week to die for.
My Vision
I am the Head of Principal Investments at XCapital, the Investment Banking arm of XBank, a premier bank that covers the West African markets. My remit covers Private Equity, Real Estate, Infrastructure, Commodities and any other area we choose to invest the bank’s capital. Our specialisations include Real Estate and Private Equity investing in Oil and Gas, Telecommunications and Fast Moving Consumer Goods. Projects targeted at the emerging middle class.
We are results driven with a focus on generating out-performance returns on behalf of ourselves and our investment partners. We are constantly seeking intelligent, curious and focused people to join us. Our edge is derived from our excellent people, our due diligence and our attitude to risk. We value an atmosphere where all opinions are listened to and encouraged and we focus on putting our clients first before profit. We are disciplined in that we focus on what we do best and turn away deals that may be lucrative but do not enhance our core competencies. Growth is organic. We focus on what we know and move into new territories where we believe we have the opportunity to be No.1 in the market place.
Because of our competence, the best deals come to us before they go to our competitors. Those we don’t run with, we advice those involved on how to improve their offers, whether they are returning to us or going elsewhere.
We are very successful in what we do, generating year on year returns in our few years of existence in excess of a 30% ROE employed. Our investments consist of 60% recurring income and 40% generated from one-off or new deals. It is these high volatility one-off or new deals that generate the out-performance. Risks are managed at every level both at the portfolio level but also at the individual deal level. Where new deals are particularly profitable, we also seek to bring them into our stable of core competencies where they are structured to reduce risk and generate recurring revenue rather than simply one-off profits.
We are results driven with a focus on generating out-performance returns on behalf of ourselves and our investment partners. We are constantly seeking intelligent, curious and focused people to join us. Our edge is derived from our excellent people, our due diligence and our attitude to risk. We value an atmosphere where all opinions are listened to and encouraged and we focus on putting our clients first before profit. We are disciplined in that we focus on what we do best and turn away deals that may be lucrative but do not enhance our core competencies. Growth is organic. We focus on what we know and move into new territories where we believe we have the opportunity to be No.1 in the market place.
Because of our competence, the best deals come to us before they go to our competitors. Those we don’t run with, we advice those involved on how to improve their offers, whether they are returning to us or going elsewhere.
We are very successful in what we do, generating year on year returns in our few years of existence in excess of a 30% ROE employed. Our investments consist of 60% recurring income and 40% generated from one-off or new deals. It is these high volatility one-off or new deals that generate the out-performance. Risks are managed at every level both at the portfolio level but also at the individual deal level. Where new deals are particularly profitable, we also seek to bring them into our stable of core competencies where they are structured to reduce risk and generate recurring revenue rather than simply one-off profits.
SWEAT - Fri 27/06/08
Yes, I am working every hour that God gives, I am getting back ache from tensing my muscles from the stress brought about by the workload, but I am also learning something new every day. I am involved in oil and gas deals, real estate deals, manufacturing company deals, health sector deals, money collection deals and any other kind of deal that makes money.
You call it, I am in it. I go to General Meetings in the middle of Lagos, where I sit across the table from business owners who have poured their lives into their businesses and are about to lose everything because of poor management. I sit across the table from smooth operators who are fortuous enough to be adept at making money. I sit across from Commissioners who have a totally different view as to how to make money. I am sweating it, but every week, I know a little more than the week before.
I am gradually learning how to do business in Nigeria. I am learning (gradually) what makes up a good deal. I am learning that if I am going to a meeting and the rain is falling, I better give myself two hrs to get there instead of one. I am learning that I can’t tear myself apart to resolve people’s problems. I am here to make money, not run a charitable organization. If I had wanted to run a charitable organisation, I would have gone and got a job with a NGO.
I am going to crack this. I am going to have this beast running like a well oiled money making machine. I am going to having things running so smoothly that I will be taking off to play golf on a Wednesday afternoon with important people, while I make money for every golf swing I take. I am going to sweat some more but it is going to happen.
You call it, I am in it. I go to General Meetings in the middle of Lagos, where I sit across the table from business owners who have poured their lives into their businesses and are about to lose everything because of poor management. I sit across the table from smooth operators who are fortuous enough to be adept at making money. I sit across from Commissioners who have a totally different view as to how to make money. I am sweating it, but every week, I know a little more than the week before.
I am gradually learning how to do business in Nigeria. I am learning (gradually) what makes up a good deal. I am learning that if I am going to a meeting and the rain is falling, I better give myself two hrs to get there instead of one. I am learning that I can’t tear myself apart to resolve people’s problems. I am here to make money, not run a charitable organization. If I had wanted to run a charitable organisation, I would have gone and got a job with a NGO.
I am going to crack this. I am going to have this beast running like a well oiled money making machine. I am going to having things running so smoothly that I will be taking off to play golf on a Wednesday afternoon with important people, while I make money for every golf swing I take. I am going to sweat some more but it is going to happen.
Home to see my folks - Sat 21/06/08
After lots of lobbying, my Oga finally allowed me to take the Friday off to go see my parents in Onitsha, East Nigeria. He had initially tried to get me take a half day on Friday, work the morning and then get a flight by midday. They were all in shock horror as I suggested that I wanted to use an ABC Luxury Bus to travel to Onitsha instead.”It is not done”, they said. “You have to fly”. Taking a bus was supposedly beneath me, a man of my new standing. Snobbish people. Flying would require a trip to Ikeja airport, waiting for a plane which is often delayed or cancelled, a flight to Enugu, then another one and half hour road trip either directly from the airport for which the airport taxi will rub his hands in glee at the extortionate fare he would charge me to travel to Onitsha or from the airport taking a taxi to the Enugu car park to take another 1 ½ trip to Onitsha. At least with the bus, I get on the bus in Lagos and got off at Onitsha where I am met by my parents to take me home. Simple. The bus won.
I’m now having a nice relaxing weekend in Onitsha with my parents and with the time to take a step away from my 7 to 7 high pressured job that gives me no time to think. I love it but I won’t do it forever. We went out Saturday morning to greet an uncle and had a visit from another guy (a Justice, but about my age, try that in the UK!). He had come back from the US in 2001 so knew where I was coming from. It was very nice having a relaxing Saturday morning jist, away from the pressures of work. My mum has since taken me round town, to see the new Stock Exchange building put in place by Soludo/Gov Peter Obi and the Anglican Cathedral complex. It’s great being back at home with my parents. It’s great being pampered. It’s one more reason why I had made my mind to come home. The happiness on their faces can’t be bought with money.
I’m now having a nice relaxing weekend in Onitsha with my parents and with the time to take a step away from my 7 to 7 high pressured job that gives me no time to think. I love it but I won’t do it forever. We went out Saturday morning to greet an uncle and had a visit from another guy (a Justice, but about my age, try that in the UK!). He had come back from the US in 2001 so knew where I was coming from. It was very nice having a relaxing Saturday morning jist, away from the pressures of work. My mum has since taken me round town, to see the new Stock Exchange building put in place by Soludo/Gov Peter Obi and the Anglican Cathedral complex. It’s great being back at home with my parents. It’s great being pampered. It’s one more reason why I had made my mind to come home. The happiness on their faces can’t be bought with money.
Fela and the state of the nation
I was listening to real authentic Fela put on by my driver on the way back home from the office in the evening. Beast of No Nation, Yellow Fever (you dey bleach oh you dey bleach) and other songs. It brought back memories of my earlier University days in Lagos when I had no clue how to chat up ladies and life was simple (apart from learning the right way to chat up ladies) but it also made me wonder whether things have changed since then. Fela was complaining that there was no light, no water, no food and some 20 years later (goodness, that long?) have things really changed?
Lagos, (I can’t speak for Nigeria but I can definitely speak for Lagos) is a two tier system. Look out of the window as you drive past; the vulcanizer, the fruit seller, the petrol pump attendant, the guy selling MTN top up cards, the guys walking with their plastic bags of food and jerry cans of water to the building site. I’m not sure if things have changed for them over the past 20 years.
It’s others like me in their air-conditioned cars, driving past on the way from their air conditioned offices to their air-conditioned mansions, blasting out diesel fumes from our generators, buying TM Llewyn shirts at the air conditioned shopping centres, maybe things have changed for the better for us.. But again, perhaps things have not changed. Nigeria has always been a two tier society. I have just moved to the other side of the divide. Hopefully there are more opportunities for more people that will make crossing to the other side of the divide less onerous than it was in the past. But still, from what I have seen, the rich still get richer but maybe the poor also have a bit more of a chance.
Lagos, (I can’t speak for Nigeria but I can definitely speak for Lagos) is a two tier system. Look out of the window as you drive past; the vulcanizer, the fruit seller, the petrol pump attendant, the guy selling MTN top up cards, the guys walking with their plastic bags of food and jerry cans of water to the building site. I’m not sure if things have changed for them over the past 20 years.
It’s others like me in their air-conditioned cars, driving past on the way from their air conditioned offices to their air-conditioned mansions, blasting out diesel fumes from our generators, buying TM Llewyn shirts at the air conditioned shopping centres, maybe things have changed for the better for us.. But again, perhaps things have not changed. Nigeria has always been a two tier society. I have just moved to the other side of the divide. Hopefully there are more opportunities for more people that will make crossing to the other side of the divide less onerous than it was in the past. But still, from what I have seen, the rich still get richer but maybe the poor also have a bit more of a chance.
Stock Market Treatise II
Following unconfirmed speculations of CBN/SEC directive for the suspension of Margin Facility (Lending by banks to stockbrokers for the purchase of stocks) last quarter, the Nigeria Stock Exchange had instructed CSCS to suspend the opening of new Joint Accounts (the Joint Accounts warehoused both the stocks purchased and the collateral buffer) thus crippling the dynamics of the Margin Facility. This was supposedly predicated on the notion that most Banks were concentrating their lending portfolio to the Capital Market to the detriment of the real sector of the economy thus stifling economic growth and pushing the unsustainable bullish run of the market.
Subsequently, Banks reduced lending to the stockbrokers and some actually called in their facilities. This immediately led to price diminution experienced over the last quarter with the bears taking over the market. There were several meetings between the market operators and regulators with even the Senate Committee on the Capital Market headed by Senator Ganiyu Solomon looking into the allegations and consequently, it was discovered that there was no justification for the continued embargo as borrowing has always been a traditional source of funding for the Capital Market worldwide.
Consequently, the CBN Governor, last week cleared the air that they did not at any time oppose Bank's funding of Capital Market activities and that the aggregate lending by Banks to the sector had not reached the point of concern to the CBN. This statement had been preceded by SEC's, also denying any directive on this. Thus, based on the above, the CSCS advised the lifting of the suspension on the operation of the Joint Account though changing the terminology to Custody Account instead of Margin Accounts and promising to further strengthen the procedure
We expect a further statement by the Nigeria Stock Exchange this week as there were still ambiguities as to the operations of the accounts as the attached letter was particular as to "Stockbroking firms". We need to clarify if the lifting of the suspension also affects tripartite accounts - Bank/Stockbroker/Client.
A sit stands, Banks can now open new Joint Custody Accounts with Stockbrokers and we should see some resurgence in share prices as banks resume lending to the brokers. However, we still need to exercise some caution as there is a possibility that there would still be constriction in the market as we approach the new December 2008 Financial Year End for all Banks.
Further caution should also be exercised as the brokers also have a deadline of December 2008 to racapitalise to a minimum of N1 billion.
Subsequently, Banks reduced lending to the stockbrokers and some actually called in their facilities. This immediately led to price diminution experienced over the last quarter with the bears taking over the market. There were several meetings between the market operators and regulators with even the Senate Committee on the Capital Market headed by Senator Ganiyu Solomon looking into the allegations and consequently, it was discovered that there was no justification for the continued embargo as borrowing has always been a traditional source of funding for the Capital Market worldwide.
Consequently, the CBN Governor, last week cleared the air that they did not at any time oppose Bank's funding of Capital Market activities and that the aggregate lending by Banks to the sector had not reached the point of concern to the CBN. This statement had been preceded by SEC's, also denying any directive on this. Thus, based on the above, the CSCS advised the lifting of the suspension on the operation of the Joint Account though changing the terminology to Custody Account instead of Margin Accounts and promising to further strengthen the procedure
We expect a further statement by the Nigeria Stock Exchange this week as there were still ambiguities as to the operations of the accounts as the attached letter was particular as to "Stockbroking firms". We need to clarify if the lifting of the suspension also affects tripartite accounts - Bank/Stockbroker/Client.
A sit stands, Banks can now open new Joint Custody Accounts with Stockbrokers and we should see some resurgence in share prices as banks resume lending to the brokers. However, we still need to exercise some caution as there is a possibility that there would still be constriction in the market as we approach the new December 2008 Financial Year End for all Banks.
Further caution should also be exercised as the brokers also have a deadline of December 2008 to racapitalise to a minimum of N1 billion.
Wednesday, 18 June 2008
The little mosquito bedtime reading story
I have a mosquito net above my bed. A few holes but it keeps me and my pet mosquitoes separate at night. However, about once every two weeks when the moon is full, my pet mosquitoes gain a superhuman intelligence probably brought on by a Draculan sleeping super gene that enables them methodically search out one of the little holes (or some other means of entry that will probably only be captured by one of those night vision, slow speed cameras you see on the nature programmes “low voice: and here they come, in single file, the forward guard, communicating to the rank and file by the use of mosquitoish wing movements, very complex, highly intelligent” but I digress...
that enables them methodically search out one of the little holes in my net and gain access one after the other from whence they latch on to my prostrate sleeping body and have themselves a feast as they shiver in ecstasy on my body (nasty)
Fortunately for me, unfortunately for them, the super gene shuts off early morning and they being all fat and lazy on my blood just sit there inside the net digesting my blood slowly "hmmmm, this is some sweet blood, yeah he must have just arrived from somewhere else, I haven't tasted blood this sweet since my days in Nam". Anyway, I wake up after a poor night’s sleep and hey, there are about 6 fat mosquitoes inside my net with me. Now it is my turn. Again remember the shark feeding frenzy from the nature programmes. Please turn away if you are squeamish but by the time I have finished, there is fresh blood mixed with mashed up little mosquito bodies all over my hands, niiiiice Revenge can be sweet afterall
that enables them methodically search out one of the little holes in my net and gain access one after the other from whence they latch on to my prostrate sleeping body and have themselves a feast as they shiver in ecstasy on my body (nasty)
Fortunately for me, unfortunately for them, the super gene shuts off early morning and they being all fat and lazy on my blood just sit there inside the net digesting my blood slowly "hmmmm, this is some sweet blood, yeah he must have just arrived from somewhere else, I haven't tasted blood this sweet since my days in Nam". Anyway, I wake up after a poor night’s sleep and hey, there are about 6 fat mosquitoes inside my net with me. Now it is my turn. Again remember the shark feeding frenzy from the nature programmes. Please turn away if you are squeamish but by the time I have finished, there is fresh blood mixed with mashed up little mosquito bodies all over my hands, niiiiice Revenge can be sweet afterall
OKADA MADNESS
OKADA MADNESS
Coming out of my house in Lekki Phase 1 this morning about 7.55am (it should have been 7.45am to beat internal Lekki 1 traffic, but hey I was late). As the car in front of us turned to enter a side road on the left in front of us, my peripheral vision caught this Okada motorcycle driver plus passenger come careening past us trying to get past the driver in front of us even though the driver had already almost turned into the side road. The Okada driver at this stage managed at speed to get past the driver but while doing so he lost the balance on his motorcycle.
He managed to drive at speed past the driver turning in and he managed to stay on a straight-ish path, he then careened at speed off another car in-front of us and he and his passenger took off in slo-mo into the air over the car bonnet to land on the tarmac in front. Unfortunately it was the driver of the Okada and not the passenger that had the helmet on. As is the way, the driver of the car that was taking a corner got out and was apologising to the passenger while the Okada driver was picking himself off the floor and pretending to limp to garner support (maybe he had actually broken his leg in four places but I don’t think people were particularly concerned with him after his display of Evil Kenevel motorcycle driving). It was immediately brought to you how cheap life can be in Nigerian.
I need a picture of an Okada motorcycle driver to back up this post. Camera out...
Coming out of my house in Lekki Phase 1 this morning about 7.55am (it should have been 7.45am to beat internal Lekki 1 traffic, but hey I was late). As the car in front of us turned to enter a side road on the left in front of us, my peripheral vision caught this Okada motorcycle driver plus passenger come careening past us trying to get past the driver in front of us even though the driver had already almost turned into the side road. The Okada driver at this stage managed at speed to get past the driver but while doing so he lost the balance on his motorcycle.
He managed to drive at speed past the driver turning in and he managed to stay on a straight-ish path, he then careened at speed off another car in-front of us and he and his passenger took off in slo-mo into the air over the car bonnet to land on the tarmac in front. Unfortunately it was the driver of the Okada and not the passenger that had the helmet on. As is the way, the driver of the car that was taking a corner got out and was apologising to the passenger while the Okada driver was picking himself off the floor and pretending to limp to garner support (maybe he had actually broken his leg in four places but I don’t think people were particularly concerned with him after his display of Evil Kenevel motorcycle driving). It was immediately brought to you how cheap life can be in Nigerian.
I need a picture of an Okada motorcycle driver to back up this post. Camera out...
Tuesday, 17 June 2008
I'M BACK (I'm back, you know it, I'm back!!!)
1. I am heartened, by the responses I have received on my blog. Thank you for your comments, at one point, I thought I was all alone (aaahhhh), but I know I am not.
2. I apologise for not maintaining regular updates. I have been working flat out to come to grips with my work portfolio. Attimes I felt overwhelmed, my comfort zone was receding into the distance, but it has come back into sight (albeit very far away, "come back, comfort zone, I do love you, and I'm sorry I ran away").
3. I don't have to always write long eulogies, waxing lyrical about Nigeria, my Nigeria. Sometimes I will write a few words, other times I will write a treatise on the state of the Nigerian Stock Market, it will depend on my workload at the time, but I will from now on, try to always write. There will be diamonds in the mud of my writing (I'm so modest)
4. There are opportunities here (come to think of it, there are opportunities everywhere). I will attempt to give you insight into to these opportunities (without breaching any client confidentiality of course)while writing about the Nollywood Nigerian movie environment that is Nigeria (but we love it)
5. This blog can actually help me with my business!. More on that as we go along.
6. I'M BACK (on with the show, for whoever is left, you will be rewarded in heaven for your dilligence)
2. I apologise for not maintaining regular updates. I have been working flat out to come to grips with my work portfolio. Attimes I felt overwhelmed, my comfort zone was receding into the distance, but it has come back into sight (albeit very far away, "come back, comfort zone, I do love you, and I'm sorry I ran away").
3. I don't have to always write long eulogies, waxing lyrical about Nigeria, my Nigeria. Sometimes I will write a few words, other times I will write a treatise on the state of the Nigerian Stock Market, it will depend on my workload at the time, but I will from now on, try to always write. There will be diamonds in the mud of my writing (I'm so modest)
4. There are opportunities here (come to think of it, there are opportunities everywhere). I will attempt to give you insight into to these opportunities (without breaching any client confidentiality of course)while writing about the Nollywood Nigerian movie environment that is Nigeria (but we love it)
5. This blog can actually help me with my business!. More on that as we go along.
6. I'M BACK (on with the show, for whoever is left, you will be rewarded in heaven for your dilligence)
Friday, 6 June 2008
Nigerian Insurance Stocks
thanks for the comments guys, please keep them coming...
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Nigerian Insurance Stocks
Nigerian insurance stocks are currently the flavour of the month. They have taken over from bank shares which have shown explosive growth over the past few years. Insurance stocks may not be as explosive but may offer equally if not more attractive long term gains.
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Considering the very low market penetration of insurance in Nigeria (sub sectors include motor, fire, general accident, oil and gas, marine and aviation and life). Add to this, the growth in credit financing and mortgages and the need to insure life as part of credit risk mitigation and government policies leading to the taking up of various kinds of insurance, you begin to see that there is a lot of upside potential for insurance and premium growth. Add to this, the poor state of asset management of the traditional (government) insurance operators and the potential for asset management improvement and attendant asset value growth where new and savvy private sector owners take over and you begin to see a strong potential growth picture for insurance stocks.
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Hence you have a sector that is supported by two strong fundamentals, potential core insurance business growth generating greater premium cashflow and potential asset value growth. Both are dependent on new management stepping into traditional stodgy boardrooms and shaking things up.
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There is some risk in that insurance has shown historical under-penetration in Nigeria and there is no guarantee that new management will step into the shoes of old, but overall the return profiles definitely outweigh the risks.
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Renaissance Capital has just published an Insurance research report and buy recommendations were placed on the following insurance stocks;
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AIICO
Continental Re
Standard Alliance
Intercontinental WAPIC
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Nigerian Insurance Stocks
Nigerian insurance stocks are currently the flavour of the month. They have taken over from bank shares which have shown explosive growth over the past few years. Insurance stocks may not be as explosive but may offer equally if not more attractive long term gains.
.
Considering the very low market penetration of insurance in Nigeria (sub sectors include motor, fire, general accident, oil and gas, marine and aviation and life). Add to this, the growth in credit financing and mortgages and the need to insure life as part of credit risk mitigation and government policies leading to the taking up of various kinds of insurance, you begin to see that there is a lot of upside potential for insurance and premium growth. Add to this, the poor state of asset management of the traditional (government) insurance operators and the potential for asset management improvement and attendant asset value growth where new and savvy private sector owners take over and you begin to see a strong potential growth picture for insurance stocks.
.
Hence you have a sector that is supported by two strong fundamentals, potential core insurance business growth generating greater premium cashflow and potential asset value growth. Both are dependent on new management stepping into traditional stodgy boardrooms and shaking things up.
.
There is some risk in that insurance has shown historical under-penetration in Nigeria and there is no guarantee that new management will step into the shoes of old, but overall the return profiles definitely outweigh the risks.
.
Renaissance Capital has just published an Insurance research report and buy recommendations were placed on the following insurance stocks;
.
AIICO
Continental Re
Standard Alliance
Intercontinental WAPIC
Thursday, 5 June 2008
The state of the (Nigerian) stock market
Nigerians are used to 100% annual returns from the stock market and 300-400% returns from new issue stocks. With the stock market currently be-calmed with stocks at best not falling in value, Nigerians are seeing a different side to the market and they don’t like it.
We are definitely not in a bear market, but at present, the Nigerian red-hot stockmarket has cooled. Any market is always going to go through cyclical phases of hot and not so hot and the rhyme and reason is most likely unknown, but here is a theory I have picked up while talking to in-house colleagues.
The CBN, worried about the amount of margin trading going on (lending to buy stocks) have put restrictions on the banks as to how much they could lend out. An example is a friend who approached me a few months ago with a bank offer to borrow to buy stocks with a 25% bank loan. Obviously not a good idea considering how the stock market has performed recently. A lot of the non deposit taking financial institutions such as stock broking firms were also borrowing heavily to invest in the stock market. In addition to this, the banks year end by which time books have to balanced has been moved en-mass to the end of December. The net effect of this is a considerable withdrawal of liquidity from the stock market to meet CBN directives on margin trading and also we are starting to see the banks starting early to shore up their balance sheets towards year end. Hence the fall in stock values.
My colleague further posited the theory that the way to play the capital markets at present was to rotate out of stocks and into interest bearing securities e.g. fixed term deposits that would mature just after year end. Banks are looking for capital to shore up their balance sheets for the year end and will be willing to pay high rates of interest (circa 17%+) to gain this capital. Conversely, the stock market is set to splutter at least through the year end. After the December year end, banks will offload their balance sheets hence increased liquidity. A lot of this cash will find its way back into the stock market which will take off, trying to catch up for lost time.
A nice arbitrage play there for you.
We are definitely not in a bear market, but at present, the Nigerian red-hot stockmarket has cooled. Any market is always going to go through cyclical phases of hot and not so hot and the rhyme and reason is most likely unknown, but here is a theory I have picked up while talking to in-house colleagues.
The CBN, worried about the amount of margin trading going on (lending to buy stocks) have put restrictions on the banks as to how much they could lend out. An example is a friend who approached me a few months ago with a bank offer to borrow to buy stocks with a 25% bank loan. Obviously not a good idea considering how the stock market has performed recently. A lot of the non deposit taking financial institutions such as stock broking firms were also borrowing heavily to invest in the stock market. In addition to this, the banks year end by which time books have to balanced has been moved en-mass to the end of December. The net effect of this is a considerable withdrawal of liquidity from the stock market to meet CBN directives on margin trading and also we are starting to see the banks starting early to shore up their balance sheets towards year end. Hence the fall in stock values.
My colleague further posited the theory that the way to play the capital markets at present was to rotate out of stocks and into interest bearing securities e.g. fixed term deposits that would mature just after year end. Banks are looking for capital to shore up their balance sheets for the year end and will be willing to pay high rates of interest (circa 17%+) to gain this capital. Conversely, the stock market is set to splutter at least through the year end. After the December year end, banks will offload their balance sheets hence increased liquidity. A lot of this cash will find its way back into the stock market which will take off, trying to catch up for lost time.
A nice arbitrage play there for you.
Wednesday, 4 June 2008
A tale of two cities (or worlds in this case)
A tale of two cities
.
I am going to tell you a tale of two cities that will boggle your mind
I am going to tell you a tale of two cities that will boggle your mind
.
Story number one
They say that a picture is equal to a thousand words. As such, here is your picture taken from a main road on the mainland (Ikorodu Road). Nigeria is not all about the island, whatever I put in my blog. This is the real Lagos.
.
Story number two
Last Sunday, I went with my people to a kid’s party. Lekki kid’s parties are a bit more than just kid’s parties. Outside suyya joint (bbq peppered beef), two bouncy castles, one large kid's train set, very nice food, loads of drink etc etc etc.
Anyway, after the event we were on our way home feeling merry, not noticing the bumps in the Lekki road below us and WHAT DO I SEE COMING TOWARS ME??? I thought I was hallucinating but I had only had one beer. Do you watch MTV? hip hop? do you notice the new drop top Rolls Royce in black with the thick metal window frame, well what did I see coming towards me, yes one of those. The Phantom Menace. I couldn’t believe it. This car costs as much as a prime Lekki detached house and here is this guy tooling around on a pot-holled Lekki road as if he was in Monaco or somewhere. Not that he probably feels the road on that kind of suspension but even then??? I couldn’t stop laughing, it was such a sight. Silly money. The kind of money that says “wait, I haven’t finished speaking”. I must say, I was impressed.
Story number one
They say that a picture is equal to a thousand words. As such, here is your picture taken from a main road on the mainland (Ikorodu Road). Nigeria is not all about the island, whatever I put in my blog. This is the real Lagos.
.
Story number two
Last Sunday, I went with my people to a kid’s party. Lekki kid’s parties are a bit more than just kid’s parties. Outside suyya joint (bbq peppered beef), two bouncy castles, one large kid's train set, very nice food, loads of drink etc etc etc.
Anyway, after the event we were on our way home feeling merry, not noticing the bumps in the Lekki road below us and WHAT DO I SEE COMING TOWARS ME??? I thought I was hallucinating but I had only had one beer. Do you watch MTV? hip hop? do you notice the new drop top Rolls Royce in black with the thick metal window frame, well what did I see coming towards me, yes one of those. The Phantom Menace. I couldn’t believe it. This car costs as much as a prime Lekki detached house and here is this guy tooling around on a pot-holled Lekki road as if he was in Monaco or somewhere. Not that he probably feels the road on that kind of suspension but even then??? I couldn’t stop laughing, it was such a sight. Silly money. The kind of money that says “wait, I haven’t finished speaking”. I must say, I was impressed.
So there you have it, an extreme case of the haves and the have nots.
Guess the informal economy business
Here is a game for you. The Nigerian economy has a very strong informal side. No tax, no questions please, God no go vex.
To educate you on the Nigerian informal economy please take a look at the picture of the underside of a tree in the business district of VI. How many informal (black market) economic activities can you write down in 5 minutes. Answers below...
.
.
.
.
.
1. Motorcycle taxi riders - the dreaded Okada
2. Seller of bootleg cassettes, DVD's and other media of doubtful authenticity and even more doubtful resolution
3. The umbrella houses a mini telecoms re-selling industry of MTN, Cellnet, Glo and other mobile phone re-charge (pay-as-you-go) cards
4. The shack at the back is a mini boutique selling the latest in trendy shirts and bags for the man or lady office worker who has to keep up with the latest fashion
5. The ladies at the back by the wall are preparing sale of lunch from their coolers for hungry lower to mid level office workers
6. Of course you did not miss the orange seller (oranges on the tray)
There you go, you are now an expert on the Nigerian informal economy (yipee)
We are here to make money!!!
Good afternoon my pipol,
I have been away for a while, walking the streets of Gidi, taking the pulse of the nation (not quite true but it sounds good). Unfortunately, I have been away working my a**e off. Working every hour God has given me in the day plus some I borrow from the night. I'm becoming too one dimensional, I know there is more to life than work, that is one of the reasons I swore I wouldn't join a bank, cos I don't want to sell my soul, I'd quite like to retain ownership of it, thank you very much.
When we go to meetings, my Oga tells all and sundry that he's there to make MONEY. They look at him in awe and wonderment. I like my Oga, I also look at him in awe and wonderment, but my Oga likes money more than me. If there is a stand-off between me and money, money will win hands down. I will be clobbered. It is a sobering fact and it makes me work.
The time will come when, my area is running like a well oiled money making machine, but until then, I have to get under that machine and do all the dirty oily work to get that machine running sweet. Hence, in a battle between me tending to my machine and me tending to my blog, the survival instinct takes over. The machine must win. My consolation is that I used to run from banks because I was fed up with being a cog in the machine, but now I get to run the machine myself.
My machine generates money, I take my cut, we are all happy.
I have been away for a while, walking the streets of Gidi, taking the pulse of the nation (not quite true but it sounds good). Unfortunately, I have been away working my a**e off. Working every hour God has given me in the day plus some I borrow from the night. I'm becoming too one dimensional, I know there is more to life than work, that is one of the reasons I swore I wouldn't join a bank, cos I don't want to sell my soul, I'd quite like to retain ownership of it, thank you very much.
When we go to meetings, my Oga tells all and sundry that he's there to make MONEY. They look at him in awe and wonderment. I like my Oga, I also look at him in awe and wonderment, but my Oga likes money more than me. If there is a stand-off between me and money, money will win hands down. I will be clobbered. It is a sobering fact and it makes me work.
The time will come when, my area is running like a well oiled money making machine, but until then, I have to get under that machine and do all the dirty oily work to get that machine running sweet. Hence, in a battle between me tending to my machine and me tending to my blog, the survival instinct takes over. The machine must win. My consolation is that I used to run from banks because I was fed up with being a cog in the machine, but now I get to run the machine myself.
My machine generates money, I take my cut, we are all happy.
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