The Value Additive Content of Executive Media Interviews
This week in Alrroya, the United Arab Emirates (UAE) business and financial daily, I champion the beneficial role that media interviews can play in raising the profile of companies among the investment community and addressing malignant information asymmetry.
Most public company executives regard media interviews as a distraction. In their view, they would rather be running their companies. As far as they are concerned, there is a dichotomy between minding the store and talking about the store. Read More…
Rebel Yodel: Shareholders’ rallying cry in 2010
This week in Street Talking on NEXT, I share my views on the probable preoccupations of shareholders and boards in the coming year.
As the year draws to an end, it is tempting to make prognostications for the coming year. If I had to identify the main trends contending for top spots on the investment community agenda in the coming year, I would forecast a rise in shareholder interest in corporate governance and heightened monitoring of capital structure evolution as it impacts the stakes of antecedent shareholders. My outlook is that passive shareholder acquiescence will be replaced by active participation in strategic decision-making, particularly among holders of non-negligible blocs of stock.
Deal or No Deal: Discordant tunes in the First Bank - Ecobank Merger Talks
Five years is more than enough time for companies to answer the ‘to be or not to be’ question on the attractiveness of a strategic proposition and then conclude it. Five years after merger talks began between First Bank of Nigeria and Ecobank, both banks are yet to bring the deal to a cloture. This week on NEXT, I point out that the main obstacle to progress may lie in a fundamental disagreement on strategy for a future resulting entity.
Mergers and acquisitions (M&A) are not trivial events. Synergy evaluation, regulatory hurdles, valuation disputes, internal and external claimsholders’ buy-in, advisory fees, integration factors, cultural issues, competitor objections, unsolicited offers and ego management are just some of the mid-air sharp knives that task the juggling skills of those driving a transaction. Little wonder that veteran investment bankers love to decorate their offices with commemorative Lucite tombstones (‘deal toys’) of consummated deals as testimonies of battlefield scars. Nurturing a deal from the first date until the dotted lines are signed demands superior matchmaking skills. Read More…
Mirror mirror on the wall: Where to go window shopping for views on company results and plans
In Nigeria, shareholder associations enjoy a disproportionate amount of space in most media coverage of comments on company actions and performance. Frequently, the attributed statements of these associations’ officers are overwhelmingly positive, irrespective of the actions or performance. This can give a misleading view that the companies have the full support of shareholders. No dissent, no critique, no balance. This week in Street Talking on NEXT, I recommend three credible alternative sources of information that the press should include in its reporting on company results and plans.
Reading news stories about company results and public offerings I often wonder if they are all written by the same writer. The titles all share an uncanny familiarity. ‘Investors tickled by Company A’s FY Results.’ ‘Company C tantalizes shareholders with x kobo dividend.’ ‘Shareholders overwhelmingly laud Company E’s planned bond sales.’ Read More…
The last I heard: A look at deal communications in Nigeria
In my first article for Street Talking, the Friday column I write in NEXT, I examine the apathetic attitudes of public companies in Nigeria to informing the investment community about the value of transactions. Historically, companies on the Nigerian Stock Exchange have performed dismally, perhaps, even irresponsibly, in communicating the merits of transactions to shareholders. However, recent events lead one to believe that the days of impunity may be drawing to a close.
Recently, Kraft Foods, the US quick serve meals giant, announced its intention to seek a merger with Cadbury, the confectionery leader. Read More…
That’s just the way it is. Things will never be the same again: Why the new SEC Rule 78(c) on book-building will revolutionalize issuer-investor relations in the Nigerian capital market.
The recommendations of the Dotun Suleiman Committee for the Review of Capital Market Structures and Processes have received a lot of attention in the press. As a result of public concerns over certain perceived abuses and improprieties on the Nigerian Stock Exchange, those recommendations which touch on the oversight functions of the Securities and Exchange Commission (SEC) over the exchange have been in the spotlight. However, one recommendation, so far adopted, that has received far less attention, is the introduction of book-building method in securities sales transactions. Known as Rule 78(c) it will have significant long-term impact on the Nigerian capital market through its potential to fundamentally change the content of public offering communications, structure of ownership of companies, surveillance of corporate governance, review of corporate performance and the quality of issuer-investor relations. In this post, we examine the trends that have led to the rise of institutional investors in Nigeria and why issuers may actually prefer them at first countenance. Then we discuss the likely implications of their established dominance on share registers and its implications for companies planning to raise capital.
In a recent critical essay on the dereliction of duty by US money managers in the supervision of public companies whose securities they buy and hold on behalf of private citizens, John Bogle, founder of the Vanguard Group, the giant fund manager, underlines the risks to the financial system as markets have gradually but surely transformed from owner-governed to agent-dominated systems. However, beyond his criticism of the ineluctable trend to greater ownership of corporations by fiduciaries, Bogle identifies their central role in contemporary capital markets, not simply as conduits of capital, but as watchmen of corporate governance and performance. Read More…
Sweeten the offer: A review of Honeywell Flour’s IPO Communications Strategy.
Compelling financial communications lies at the heart of every successful securities sale transaction. As the drought in developed credit markets spread to the local equity market in 2008, the competition for capital became much tighter. Now more than ever, it is vital for companies planning to raise capital to ensure that they are represented by a financial communications team that fully understands both traditional and new media channels with the contacts and credibility to initiate balanced coverage of the company pre- and post-IPO. Its goal should be to ensure that the value case for the transaction be made as clearly, succinctly and compelling as possible to the investment community. The initial public offering of Honeywell Flour, which opened on December 3, 2009, provides a good test case to examine how Nigerian companies are evolving their financial communications strategies in difficult market conditions.
Last year will go down in history as annus horribilis for investors on the Nigerian Stock Exchange. After years of heady growth, when public offerings succeeded more from momentum and frenzy and less on a clear understanding of the underlying business with its risks and opportunities, buyer’s remorse is the new mood of the times. Return is dead. Caution is new king.
One thousand ways to say ‘I Connect’: How companies on the Nigerian Stock Exchange can use social media (2).
Within the enterprise, social media has often been too hastily dismissed as a[nother] fad and buzzword with dubious business value. We feel strongly that companies that fall into this facile categorization miss the whole point about its value. The ubiquity of social media will ensure that it will become the dominant means for information distribution in the future. It offers companies invaluable opportunities to reach stakeholders and their affinity communities in ways that were, until quite recently, simply unimaginable. In this post, we examine how companies on the Nigerian Stock Exchange can foster and participate in these trusted reputational distribution networks.
What is social media? Are social media and social networks the same thing? How can companies take advantage of these new channels and platforms? Where to begin? Can social media serve a purpose for companies’ investor outreach programs in non-developed country markets where internet penetration may not be very high? Is social media a tool or a revolutionary new way of interaction? How can the success of adoption be measured? We provide answers and guideposts to these. Read More…
One thousand ways to say ‘I Connect’: How companies on the Nigerian Stock Exchange can use social media (1).
Within the enterprise, social media has often been too hastily dismissed as a[nother] fad and buzzword with dubious business value. We feel strongly that companies that fall into this facile categorization miss the whole point about its value. The rapid growth and utility of social media will ensure that it will become the dominant means for information distribution in the near future. It offers companies invaluable opportunities to reach stakeholders and their affinity communities in ways that were, until quite recently, simply unimaginable. In this post, we examine a number of ways in which companies on the Nigerian Stock Exchange can use social media.
What is social media? Are social media and social networks the same thing? How can companies take advantage of these new channels and platforms? Where to begin? Is social media adoption limited to a certain demographic? Is social media about communication or about interaction? What makes it so innovative? How can the success of adoption be measured? We provide answers and guideposts to these.
Why do Nigerian companies neglect transaction value communications: A critical look at the aborted Zenon-AP merger and Bank PHB-Spring Bank acquisition.
In the four year period from January 2005 to January 2009 , the value of M&A transactions in Nigeria has far exceeded the total value of such transactions in the prior 20 year period. Yet, the content and quality of communications on the compelling reasons for a deal remains dismal. The recent cases of the aborted Zenon Petroleum & Gas - African Petroleum merger and the Bank PHB acquisition of Spring Bank provides classic studies on the attitudes of Nigerian companies to deal communications.
At the annual general meeting of African Petroleum (AP) held on April 28, 2008, shareholders overwhelmingly approved the merger of their company with Zenon Petroleum and Gas Limited, whose chairman, Femi Otedola, controlled over 50% of the company’s shares.
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