“Most Nigerian stocks are public equities which due to their relative illiquidity qualify as private in developed markets. You may have heard that foreign investors are descending en masse to start playing in our equities? A lot of portfolio managers miss what they see but I believe I have my eye on the ball. I also have a very reliable source at the CBN.”
Edward steepled his fingers and smirked at this point. Which businessman would admit otherwise? “So what is the attraction to the Nigerian business landscape?”
“The new Pension Fund scheme is in full play and you know that the Central Bank has declared a final deadline for banks to meet the new N25 billion capital base requirements.”
“Wasn‘t that at the end of last year?”
“Not anymore. There will be a 90-day extension taking it to March this year.”
Edward swung in his seat and pushed forward. “Is that so? I didn‘t hear about it.”
It was Mr. Odusote‘s turn to snicker. “Not many people have. The Central Bank plans to issue bonds to cover the liabilities of any insolvent banks that don‘t meet the deadline.”
“Is that all the CBN mole had to advise?” His tone started off cutting but he moderated it. It wasn‘t the man‘s fault that his own news channels were not as effective.
“The apex bank also wants the banks to source capital from the private sector. The best bit is access to IPOs and you know the Transcorp offering is coming up soon.”
The Transnational Corporation, or Transcorp as it was more widely referred to, was touted as the biggest thing to happen to Nigeria and indeed Africa. In less than a year of being established, the company already owned controlling interests in two massive government-sold businesses. They had completed an unprecedented private placement last December. Some people were waiting for the public offer with bated breath but Edward preferred to be more cautious. Transcorp had overwhelming political backing which wasn‘t necessarily a good thing. They were also over-leveraged and owned corporations that could become embroiled in litigations.
“What I am proposing is a mutual fund that will be based on margin trading.”
Edward opened his mouth to speak but was cut off by Mr. Odusote. “It is not illegal contrary to what some fund managers and dealers believe.”
“I didn‘t think it was but it is not something I might want to go into,” Edward smiled.