Recapitalisation Saga: 3 firms approaches Nigeria Stock Exchange



Three of the 26 listed insurance companies on the floor of Nigerian Stock Exchange (NSE) have initiated plans to approach their respective shareholders to raise N6 billion in a bid to recapitalise and become stronger to play active roles in insurance market by the time the new supervision model, that is, Risk Based Supervision(RBS) kicks off in the country before year end, LEADERSHIP can exclusively reveal.

Consolidated Hallmark Insurance PLC, Royal Exchange PLC and Law Union and Rock Insurance PLC have concluded plans to raise N6 billion through public offers and private placement respectively.

Also, LEADERSHIP investigation revealed that more than 10 insurers are equally making frantic move to raise fund through the nation’s capital market, even as about five underwriting firms are currently discussing with foreign investors to come and invest in these firms.

Moreover, the likes of Niger Insurance Plc, Universal Insurance PLC, International Energy Insurance(IEI), among others, are already discussing with various foreign investors who have indicated interest to invest in Nigeria’s insurance industry.

While some had already notified the Nigerian Stock Exchange(NSE) and the Security and Exchange Commission(SEC) of their plans to approach the market through public offers, others are already discussing at the board level on ways to woo new and existing shareholders to acquire more holdings in their respective insurance firms.

With RBS, expected to lead the sector to recapitalisation and specialisation of businesses, most companies planning to operate in the big and lucrative sectors, such as oil and gas, aviation, maritime sectors, among others, are trying to raise funds to increase their capitalisation.

Some companies, it was learnt, are planning to seek the approval of their shareholders, to raise funds, at their respective 2016 Annual General Meetings(AGM), expected to come up in a couple of weeks or months.

The Chairman, Consolidated Hallmark Insurance PLC, Mr. Obinna Ekezie, had informed its teeming shareholders at its recent 2016 AGM in Lagos, that the firm plans to raise N2.5 billion additional capital  or its equivalent whether locally or internationally or a combination of both.

The N2.5 billion, he said, would be raised through either private or special, public offerings right issue or a combination or any other methods it deem fit.

He disclosed that his underwriting firm is expected to do so, through issuance of shares, convertible securities or depository receipts or any other instruments, whether as a standalone transaction, which would be determined by the directors, subject to obtaining the approvals of the relevant regulatory authorities.

Moreover, the group managing director, Royal Exchange PLC, Alhaji Auwalu  Muktari, said the company is talking to about two local investors.  According to him, “I don’t want to mention names; we are talking to about three international investors and two local investors. That is also going to be concluded between now and end of this quarter. We are also working towards listing a bond in Nigeria Stock Exchange and all the documents, process and approval from the Securities and Exchange Commission(SEC) is being tidied up. We hope to list bond of about N3 billion with the Nigeria Securities and Exchange commission in the next two months.”

Muktari said the proposed plan was in line with ongoing reforms in the insurance industry, particularly, RBS, requiring increased capital structure for bigger ticket risks, adding that the company was being proactive in readiness for higher responsibility.

He said: “We want to play big in the Nigerian insurance industry and with need for more capital in the industry, we are re-strategizing to make sure that we have the required recapitalization to play bigger and take the opportunity in the insurance industry. Besides that, the company is setting up a pension fund administration company, a PFA so that we tap into the opportunity of the annuity business.”

Source: Leadership