‘FX Reforms Improve Valuation Transparency For Foreign Investors’

The president of Association of Issuing Houses of Nigeria, Kemi Awodein said, the reforms in the forex market has significantly improved valuation transparency in companies that enabled more foreign investors to invest in the economy.

Awodein stated this at the AIHN Annual General Meeting held yesterday in Lagos.

The AGM provided an opportunity for the AIHN executives and members to receive the association’s audited financial statements for the year ended December 31, 2023.

The financial year results showed the association recorded N86.56 million income in 2023 financial year, an improvement from N85.41 million it achieved in the corresponding period of 2022.

Awodein explained that the several successful transactions facilitated within the year, including Heineken’s $24 billion acquisition of a controlling stake in Nigerian Breweries and Sahara Group’s $1 billion purchase of Eabin Power, were boosted by the Forex reforms.

“These deals were facilitated by the restructuring of the FX market, which improved valuation transparency for foreign investors,” she said.

AIHN  president said the ongoing recapitalisation of banks has also supported growth in the equities market, which is a good development for the economy.

She said that in 2023, the Nigerian investment banking sector saw significant developments influenced by key economic reforms, particularly the removal of fuel subsidies and the unification of the exchange rate.

According to her, these reforms had a profound impact on the overall financial landscape, enhancing foreign investor confidence and increasing liquidity in the market. These reforms, alongside broader macroeconomic adjustments, have shaped investment banking strategies, enabling new opportunities in capital raising and mergers and acquisition activities.

“The prominent transactions are Seplat Energy’s $650 million bond issuance, aimed at expanding its energy operations, and Airtel Africa’s $500 million capital raise, which was used to enhance telecommunications infrastructure. These initiatives were made more feasible by the improved economic environment following the reforms.

She added that improvements in transaction processing and time-to-market cannot be overemphasised and represent positive developments in the market.

She noted that “foreign portfolio investors are focused on the currently elevated effective yields on Treasury Bills and Commercial Paper at the expense of locking in returns on government bonds for a more extended period.”

She disclosed that in first half of this year, the Nigeria Exchange Limited’s All-Share Index (ASI) recorded an impressive return of 33.8 per cent, outperforming its African peers, saying that “the market’s bullish run was buoyed by a confluence of factors, including robust corporate earnings, dividend declarations, and a heightened interest from both domestic and foreign investors.” Awodein said.

Awodein said, “the banking recapitalisation has invariably created an opportunity for the growth of real investment and a deeper capital market.

She added, “I am confident that constructive engagements will result in an upsurge in issuer interest and ultimately contribute to the deepening of the Nigerian capital market.”