PFAs Recapitalisation: Stanbic IBTC, Five Others Surpass N5bn Mark as Others Race to Meet Deadline

Ebere Nwoji

Ahead of April 2022 deadline given to Pension Fund Administrators (PFAs) to beef up their minimum share capital from the current level of N1 billion to N5 billion, six out of the existing 22 pension fund administrators have already surpassed the N5 billion mark while others are on race for success.

Topping the list of these successful firms is the Stanbic IBTC Pension Managers which according to the financial report of pension fund operating firms for the 2020 business year published by the National Pension Commission (PenCom), has successfully accumulated a total share holders’ fund of N64.45 billion against N50.42 billion in 2019.

Stanbic IBTC pension Managers’ total assets during the year stood at N80.72 billion as against 2019 total assets of N64.93 billion
Trustfund Pension Plc was the second in the ranking with shareholders’ fund of N12.49 billion as against N10.78 billion in 2019. Total assets in the year under review stood at N13.75 billion against N12.02 billion in 2019.

ARM Pension Managers Limited came third with N9.03 billion shareholders’ fund; against 7,482,269 billion of 2019 ARM total assets stood at N13.70 billion compared with N11.32 billion in the preceding year.
The NPF Pension Limited, followed suit with shareholders’ fund of N8.01 billion against 2019 total figure of N5.48 billion; Assets under its control stood at N10.493 billion.

On its part, First Guarantee Pension Limited reported a shareholders’ fund of N7.26 billion compared with 2019 figure of N10.86 billion total assets for 2020 stood at N7.265 billion as against N10.86 billion of 2019.
Leadway Pensure Limited recorded a shareholders’ fund of N7,05 billion as against 2019 figure of N6.10 billion. Its total assets stood at N8.671 billion for the period under review as against N7.331 billion in 2019.

Others are; Premium Pension Limited, with a shareholders’ fund of N5.31 billion; Crusader Sterling Pension Limited, N4.67 billion; Sigma Pension Limited, N4.34 billion; Pension Alliance Limited, N4.29 billion; FCMB Pension Limited, N3.48 billion; Fidelity Pension Managers Limited, N3.44 billion and NLPC Pension Fund Administrators Limited, N3.23 billion.

APT Pension Fund Managers Limited has N2.68 billion; AIICO Pension Fund Managers Limited has N1.76 billion while OAK Pension Limited, has N1.73 billion.

AXA Mansard Pension, now Tangerine Pension Limited, has N1.70 billion; Veritas Glanvill Pension Limited, has N1.53 billion; IEI Anchor Pension Managers Limited, has N1.37 billion; while Investment One Pension Managers Limited, has N1.26 billion and Radix Pension Managers Limited, N985.68 million
PenCom had in April this year announced a new capital regime for the pension sector increasing the sector’s minimum operating capital from N1billion to N5 billion giving Operators April 2022 as deadline for compliance.
According to PenCom, the increase of the shareholders’ fund of PFAs from N1 billion to N5 billion, was aimed at boosting PFAs capacity in terms of operational efficiency and service deliver
From the commission’s report six months to the expiration of the grace period, not many operators have met the benchmark prompting the sector stake holders to mount pressure on the umbrella body of Pension fund operator’ umbrella body the Pension Operators Association (PenOp) to engage the regulator for a possible extension of the deadline.

At a recent virtual workshop organised by PenOp titled, “Post Recapitalisation strategy,” Head, Funds and Investment Manager Ratings Augsto &Co, Wonuola Kunle-Bello, had noted that the new capital regime was most likely going to impact operators in many ways among which were operators would scout for additional capital injection.

She said operators would seek to raise funds directly or indirectly.

According to her, for those that would have to raise funds, directly, there would be additional pressure to sweat capital and they would play more aggressive to retain and get new customers.

She said indirectly, operators would gun for higher profit retention and lower dividend payout.

They would opt for business combinations in form of merger and acquisition, they would give room for new entrants through investments by allowing both foreign and local investors to inject money into their Operators
She said these would give room for various considerations in post recapitalisation era especially among firms that would go into mergers.

According to her, these considerations may be in the areas of Culture and Risk Management practices of the firms in question as they might differ, “therefore the firms in question would have to arrive at agreement point. There may be differences in their boardroom culture as well as corporate governance behaviour and they would therefore arrive at point of equilibrium.

She however projected that despite the recapitalisation challenges, the pension sector would continue to maintain the current growth track at the rate of 18 percent per annum.

She projected that after the sector had overcome the general challenges posed by the COVID-19 pandemic, the pension assets, which at present stands at N13 trillion would hit N20 trillion mark by the year 2023 at a projected annual growth rate of 18 percent.

“Given the increase in the minimum share capital requirement for pension companies to N5 billion from the N1 billion, we expect to see business combinations and strategic partnerships in the near term.

“We expect that Industry operators would explore investments in the foreign markets to provide real returns to contributors, given the dearth of investible assets and the rising inflation rate in Nigeria. Focus will be on quality of enrollees not just number, “Bello stated.