Chidoka: Stock Market Decline Offers Entry Opportunity

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The Managing Director/Chief Executive Offier of Kairos Capital, Mr. Sam Chidoka, in this interview speaks about plans of the firm which was recently granted an issuing house licence by the Securities and Exchange Commission. Oluchi Chibuzor presents the excerpts:

What is your unique selling point?
We are confident. We are absolutely very confident. Personally, I have done this for a while. The team at Kairos, we have combined experience of over 60 years. So, once the company is new, the team is not new in any form or shape. We have been around. We were here when the global financial crisis happened in 2008, we were here when the boom happened 2006 – 2007; we were here when the All Share Index lost 19 per cent last year and so we have seen the cycles of up and down in the market. So, we are confident that we are able to play in the market and be successful as a firm.

Part of the things that we are confident about is that we understand how this market works, we understand the people who are raising funds are and we know them and they know us and they respect our professionalism and our abilities. And so, we hope to offer in the market our unique selling point. We are not going to be all things to all men, we intend to have some unique core clients that we would be servicing over and over. One of the things actually in the market from my experience is that a client wants to issue a bond and everybody rushes that they want to be part of the transaction and the client issues the bond and everybody goes home and wait until the next round when the clients rings another bell that it wants to issue securities in the market again. That is not what we hope to do.

What we hope to do is to work with our clients from when they are issuing, to when they are not issuing. This is because in the financial advisory space, we found that there are a lot of things going on with clients that if you are not close to them they won’t confide in you. There are clients who just need their systems to be made more official, there are clients who just need optimisation of the way they do business which is separate from raising funds in the capital market. So, we are confident that we will work very closely with our clients and we will be focused on the customer and do our best always to give them the best advice and to bring them to the point where they are either issuing securities or willing to list in any of the exchanges whether on the Nigerian Stock Exchange (NSE) or FMDQ.

So, what is your projections for economy in 2019?

Well I think a lot is riding on the elections. I think the elections are probably too close to call. So the trajectory of the economy, especially where we play, the financial industry, would be dependent on the outlook of the elections. So, we have seen one government in power for close to four years and we can guess where they are going and there are some people trying to take over. If any of them wins, the trajectory will probably change. But all in all, we think that it is going to be an interesting year for the country. We think that the first quarter has been sacrificed for elections and we think that until second quarter before we begin to see activities pick up.

We hope the elections goes the way of 2015 where it was peaceful. If that happens, then post-election activities would come in quickly. We are hopeful that the trajectory of inflation coming down would continue and so the prime lending rate will probably come down and we find more corporates coming to the market. Also, it is clear to us that the federal government cannot fund the 2019 budget. It is very clear. They will need to sell some assets clearly and so we see some traction in the advisory space in terms of divestiture from the federal government. We hope to tap into that. The federal government would continue to raise money. There is deficit already and that deficit could worsen if the prices of oil continue to dip. So, we hope to tap into that space and hopefully, on the whole, we hope that the economy will pick up in 2019, but post first quarter. We don’t expect much this quarter.

And for the capital market, what are your expectations?

Well, we expect foreign portfolio investors (FPIs) to come back after the elections. I think it is election jitters that affected the equities market. We believe that most of the people who had investments in our markets felt the need to exit, wait for us to have our elections and probably come back. Now, the good part is that if you look at the Nigerian Stock Exchange (NSE), right now, companies are trading at very low prices, so there are opportunities in the market. So we expect that after the elections, and we are very hopeful that the elections would not bring any crisis, once that happens the foreign portfolio investors would come back because there is a huge upsides in the market. So we expect that foreign portfolio investors would come back.

What should we expect from your company and are you looking at getting a stockbroking licence?

Well, in the immediate we are not looking at getting a stockbroking licence. In the immediate we are not focusing on that space because we have a sister company that has a stockbroking licence and we have been leveraging that relationship and we want to continue to leverage that relationship. We want to be completely focused. Most companies like ours have formed a group structure where they have an issuing house licence, they have an asset management licence, the have a stockbroking license, some have gone into the registering business, some have even gone into the lending business with doing the micro lending business right now and all of that.

That is a strategic intent and that is good. But for us in the immediate future, we want to focus on build capacity in corporate finance. So we have a sister asset management company that we have gone into alliance with and all our individual clients are managed by the Same thing we have done in the stock broking space. We have a company that we have gone into an alliance with and all our stockbroking businesses go through that firm. We have a couple of clients that we are going to be listing by introduction on the NSE this year. We expect that by second quarter, we will be taking one firm to NSE. So we will be leveraging on that stock broking firm while we will be handling the financial advisory services through about.

Where do you see Kairos in the next five years?
For us our strategic intent like I said is to grow capacity, show capacity and be bold to show ourselves as a leader in this market. That is what we want to do. We intend to use this year as a year of announcement to show our capacity. We have a couple of clients we are working with and in the next few months, the transaction we have done will be hitting the market and people will see what we have done. So we clearly want to see Kairos as a market leader. We believe in co-competition. We believe in collaboration and competition. We are not coming to the market to just compete, but we have had friends in the market and we still have friends and we want to co-compete.

We want to continue to build capacity by collaborating with them on their transactions and them collaborating with us on our transactions while we compete. So the idea is to have Kairos stand out in the market in the next few years and probably start to diversify our investment types over time that in the next future, in the next 24 months , we are narrowly focused on corporate finance, capital raising, mergers and acquisitions, advisory, divestitures, spinoffs, management, takeovers and such transactions. We want to be focused on that and known as we go through corporate finance market and player in the market. That is our take.