EFG-Hermes Holding SAE will apply for an investment-banking license in Nigeria that it plans to use to expand in West Africa after acquiring brokerage and research firm Primera Africa Securities Ltd.
The company wants to use Nigeria as a regional hub to support clients in countries including Ghana and Ivory Coast, Ali Khalpey, chief executive officer of EFG-Hermes’ frontier unit, said in an interview in Lagos. The Nigerian license marks the next phase of growth for the firm seeking to grow in undeveloped markets across Africa and Asia, he said.
EFG-Hermes bought Primera Africa in July, its second foray into sub-Saharan Africa after obtaining a Kenyan stockbroking license in July 2017 that enables it to extend its operations to Tanzania, Uganda and Rwanda. The company’s investment-banking advisory business is targeting multinationals and big local companies as customers, according to Khalpey.
It hopes to conclude the acquisition of Primera in the next four weeks, subject to regulatory approvals and the Lagos-based brokerage firm fulfilling some conditions, he said.
EFG-Hermes, the top adviser on initial public offerings in the Middle East and North Africa last year, hired Khalpey in January 2017 to build a frontier-markets business. Since then it has opened in Bangladesh, acquired a brokerage in Pakistan and is starting to serve clients in Vietnam.
The company is looking to make hires in Nigeria in the fields of research, trading and investment banking as it aims to establish a strong platform to manage growing volumes of business from the region, according to the CEO. “We’re very excited about where Nigeria will go,” Khalpey said. “There will be speed bumps along the way but it is a very exciting capital market for us.”
While investor sentiment toward Nigeria and other emerging and frontier markets has soured in the face of higher U.S. interest rates and uncertainty over a global trade war, many assets remain attractive and the mood could change, he said.
Confidence in Nigeria was further dented by a fresh dispute with wireless carrier MTN Group Ltd., which was accused by the central bank of illegally repatriating $8.1 billion out of the country and a separate claim for back taxes of $2 billion. The stock market, down more than 15 percent this year, could rebound after elections planned for the first quarter, he said, adding that yields on Nigerian Treasury bills also need to come down to spur more investors into equities. President Muhammadu Buhari plans to seek a second term.
The Cairo-based company sees opportunities for investors in Nigeria’s consumer goods industries and banks as the economy recovered from a 2016 contraction, Khalpey said. Its top three picks in the nation’s banks are First Bank Holdings, Zenith Bank and Guaranty Trust Bank based on their “management teams, balance sheet and capital strength,” he said.
“Nigeria may have some investor apathy today,” Khalpey said. “But we are building a business on a 15-year view.”