Dike Onwuamaeze
The Managing Director/Chief Executive Officer of the FMDQ OTC Plc, Mr. Bola Onadele, has tipped Nigeria as one of the top African countries to benefit from the global $4.5 trillion global private equity investment.
Onadele disclosed this yesterday at the Coronation Interactive Session with the theme “Capital Mobilisation Through Private Market,” that was organised by the Coronation Merchant Bank Limited.
He stated that the destination for private equity in Nigeria would be infrastructure and healthcare financing.
Onadele, who was represented at the interactive session by the Head, FMDQ Private Capital, Mr. Yemi Osunibi, said that surveys by general and limited partners placed Nigeria as the second and third preferred investment destination respectively for private capital in Africa.
He said: “The big deal we have seen is private equity. Over the past 10 years, private equity has hit $4.5 trillion in assets under management. These global funds are finding their way into Africa and also Nigeria in particular.
“Private equity is the asset class of the moment. In the west, a number of public companies are being bought out by private equity where they can grow quicker without public scrutiny.”
Onadele also said that the private credit market has been substantial especially in Nigeria as the FMDQ private capital platform has seen N664 billion transactions since it was set up in 2020.
“Private credit will continue to grow in Nigeria as the public finance is challenged and a real opportunity for Africa is how to tap into private markets to develop infrastructure space.
“The infrastructure market will probably be the biggest driver of growth for the private market in the next 10 years in Africa and Nigeria.”
He said that global trends in mobilising capital is shifting from traditional channels like bank lending and public capital market to private credit market because banks are focusing on bigger companies and the need to escape the high regulatory requirements and cost of compliance for public companies.
“There has been a long shift toward private capital as banks and public markets have transitioned from serving small and medium businesses to larger companies.
“Banks is withdrawing a little bit from the middle market as a result of their large capital which they are focusing on larger high-rated borrowers. Even public (capital) markets are also shifting to larger companies and middle-companies have not been able to tap into such markets.
“So, we have also seen a growth in the private equity market that has gone up four times since 2002. From 2015 the private equity deal has exceeded public equity deal in volume as a result of reduction in bank lending,” he said, adding that the lure for private credit market is also motivated by investors’ desire to escape the rigorous scrutiny regulators subject investors and publicly quoted companies in the capital market.
“Institutional investors across the globe are in search of alternative channels for their growing funds. There are institutional investors who want to invest in infrastructures. So, private market enables investors to focus their funds on things that interest them,” he said.
The Managing Director/Chief Executive Officer of Coronation Merchant Bank, Mr. Banjo Adegbohungbe, said in his welcome address that the interaction sessions was initiated by the Coronation Merchant Bank Limited to stimulate discussion that would develop credible and workable solutions to common challenges.
He said: “It is our intention to continue to facilitate productive engagement like this with relevant stakeholders in order to generate solutions for critical sectors of the economy and to add value to our existing and potential customers alike.
“The theme, “Capital Mobilisation Through Private Market,” is chosen because of the potentials we see in the private segment of the Nigerian capital market. This market has had its fair share of missteps in the past. But we have come to observe very credible and increasingly sustainable structures are being built to orginise the otherwise arbitrary situation earlier observed in this sector of the market.
“It is now obvious that companies need not become publicly quoted to attract much-needed capital. In fact, it is obvious that with clarity on entry, monitoring and exit investors can make more informed decisions on the investment opportunities that abound in credible private companies.”
