Last week, FBN Quest, the investment banking and asset management arm of FBN Holdings Plc advised private mid-cap companies to carefully explore the financing options available in the local financial markets.
Financing options like equity and quasi-equity capital are important sources of financing for mid-cap companies seeking investment for their current operations and expansion initiatives. Equity capital, for instance, can help businesses and their owners sell shares to investors to finance expansion and growth, without immediate obligation. Similarly, quasi-equity which encompasses various loan and convertible loan options for which repayment is linked to future cash flows is important since it often provides more flexible payment terms than traditional loans.
However, Ijeoma Agboti, FBNQuest’s Managing Director of Funds, while speaking with a financial journalist during an interactive session in Lagos noted that the current economic headwinds facing mid-cap businesses make it imperative for business leaders to carefully plan their capital needs to ensure optimization and defensive positioning.
Also speaking at the media parley, Abidoye, Head of the Equity Research team of FBNQuest, talked about the prospects for Nigeria’s macroeconomy, highlighting the outlook for public debt, the exchange rate, GDP range, fuel subsidy and inflation.
He explained, “businesses and investors now face difficult conditions including mounting pressures on inflation and exchange rate, constrained disposable income as well growing pressure from the external sector. Given the challenges on both the global and domestic fronts, businesses and investors need to have informed views on important macroeconomic variables to minimize business risks and to develop a long-term strategy to take advantage of opportunities as they arise.”
Notably, Agboti emphasized that while the outlook for the business environment remains uncertain over the next 6 months, strong opportunities remain to bolster capital structures and pursue strategic business prospects. “A difficult economic environment provides a good opportunity to re-strategize and position for recovery,” she said. In the process, investors should decipher attractive opportunities presented by quality issuers.
Additionally, she discussed some of the notable investments FBNQuest has worked on in the areas of private equity, venture capital, real estate opportunities, as well as infrastructure. She cited the $15m investment in MainOne – a leading West African data centre and connectivity solutions provider as an example.
She explained, “Over the last 13 years that we sat on their board we have helped them diversify the business from laying cables to having data centres. Early this year, we exit the investment after a successful negotiation with Equinix, the largest digital infrastructure company in the world, to buy MainOne. We are proud of this investment. What they did 13 years ago laid the foundation of the technology industry that we see today in Nigeria and West Africa. Many businesses we have invested in on the VC side are enabled by the connectivity put in place by MainOne. This is the power of private capital, growth equity capital,” Agboti noted.
