Lagos (INVESTADVOCATE) Peter OBIORA, Online Editor at www.investadvocateng.com recently captured a Question and Answer Session at the unveiling of a new name INVESTMENT ONE Financial Services Limited, former GTB Asset Management Limited (GTBAM) and erstwhile subsidiary of Guaranty Trust Bank Plc (GTBank) at the Corporate Head Office of the Company in Lagos Nigeria.

At the session, Nicholas Nyamali, Managing Director (MD) of the Firm discussed on the new brand INVESTMENT ONE, its services and other related issues. Excerpts:

Who are the new owners of INVESTMENT ONE Financial Services?

This Company was sold mainly to the Management and Staff that was the document which was signed between us and the Bank. There was a Management buyout, however, after the Management buyout, we asked a few friends to come and invest in the Company.

The new shareholders coming to join the Management and Staff have one common characteristic and they are those related to GTBank in the past. We want to keep it as close as possible to a GTBank kind of Company. If I may add, one thing you will notice that GTBank did was to divest because of the regulation of the Central Bank of Nigeria (CBN); but what we observed is that the Bank felt strongly the work it has done, the kind of Company, transition and the changes it tried to build in the industry should continue.

Therefore, one thing that GTBank did in the divestment was to ensure that individuals who took over all the GTBank related Companies had connections with the Bank. That was important to them; they didn’t want to sell to somebody whose ideas, culture or values would fundamentally change all they have done in the past. In our case, in keeping with that tradition, the people we have asked to join us; like I said earlier are those people related to GTBank in one way or the other. The people are ex-staff, customers of the Bank; but 60% would still be owned by Management and Staff; so it will still remain a Management buyout.

Will INVESTMENT ONE a stand alone Company come to list on the Stock Exchange?

That’s a long term plan; currently there are no plans to list, it’s a privately owned Company and we think the value we are trying to bring into the investment space, the is the original vision GTBank had in setting up the Asset Management Company this is what we are pursuing. Let me describe our vision, when wanted to set up this Company, the late Managing Director, Tayo Adenirokun, who was the CEO of the Bank at that time was very clear in describing what he wanted, we wanted to set up a Company that will provide investment education and service to the generality of Nigerians.

In our country, unlike in other parts of the world, there is very little knowledge and participation in investment. A country with about 160 million people, how many Nigerians are actively involved in the investment space? We think to take the country to the nest level; just as GTBank was a leader I trying to bring innovative ideas into the Banking space, this Company’s vision is that we will introduce innovation into the investment management space and our key goal as we become innovative is to attract more Nigerians into the investment space.

Let me give an illustration, like I said earlier, GTBank entered the Banking Sector around 1992, with a clear mind of bringing about change and allowing more Nigerians to participate. Similarly, INVESTMENT ONE says it can bring about change in the Investment Space and allow more Nigerians to participate. This vision is clearly what we are pursuing, we are a profit Company; but part of the ethos is that the aspect that involves investment education will not be a profit part of the Company, but on the service part, we will make money from it; because people pay for services we render. However, let’s keep in mind two major key parts of our business which is to educate and to provide services in the investment space.

So, for those of us who are shareholders, staff and Management of INVESTMENT ONE, we are driven by this goal and vision, we want to help Nigerians in their investments.

EDITOR’s NOTE:

“Recently, INVESTMENT ONE launched a “Virtual Investment Simulator” (VIS) a gaming platform designed to educate Potential Investors and Researchers to enable them interact with the Nigerian Equities”.

INVESTMENT ONE’s current Capital Base

The Company’s Capital Base is N2.5 billion.

What motivated the name INVESTMENT ONE and how much did Management buyout the Company?

In terms of what motivate the name, we are saying we want to be a one stop shop for investment services; the name INVESTMENT ONE mirrors the desire to be a one stop shop for Comprehensive investment. We have four services we provide, for instance, if someone wants to work on an investment, the person needs an advice. INVESTMENT ONE has an Advisory License and can provide the advice.

After getting the advice and the person is satisfied and want to buy shares through a Stockbroker, INVESTMENT ONE is a Stockbroking Firm and can provide such services.

Also, if the person is satisfied buying shares and wants somebody to help him hold his funds and manage it, INVESTMENT ONE can provide that service as a Fund Manager.

If I’m getting old and seeking how to create a structure whereby I can transfer to my children foundations, beneficiaries, the person needs a Trustee, INVESTMENT ONE can provide such a service. So this full cycle from Advice, to execution, manage and trust, INVESTMENT ONE provides such services and we think in one place, people should find a comprehensive investment services in one location, that’s part of the thinking behind the name INVESTMENT ONE.

One the amount, we signed a non-disclosure agreement and would want to abide by that. I can assure you all the transactions were filed with Securities and Exchange Commission, Central Bank of Nigeria and we had to get approvals before the deal was done. It was a bid process; some Foreign Firms came to bid for it and Local Companies too. We won the bid in terms of financial terms, obviously as insiders we knew more on the value of the Company and through due process, we won the bid.

What should your customers and potential prospects expect from INVESTMENT ONE?

They should know it’s the same Company and recognise that the values, vision, processes that we had when we were a subsidiary of GTBank remains the same, we would not change, these are our core fundamental points; but they should also know that the goal we provide is partnership with our customers to help them achieve their objectives. If you are looking for an Investment House where you can get an excellent customer service, we at INVESTMENT ONE can provide that, its one of core values.

The second core value is insightful Market information. Our business is not banking; investors need Market Information to be able to make the right investment decision. If we all know the price of a stock will double the next day, I’m sure all of us will be rich today; but we are not God. However, we do have analytical tools to provide you with the information to make the right investment decision.

Thirdly, on innovative services, traditionally in Nigeria if you ask people to go into investment, they can only do two things, either put their money in the Bank; which is fixed income or they buy shares which is equities; after that what else? Now INVESTMENT ONE is saying we believe in providing innovative investment solutions. I will give an example of something we have done in the past, this was in 2008 when the market was booming in the Real Estate Space, you can buy land in Banana Island as an example and the land goes up in value within a short period.

Again, you find out that Retail Investors could not play in that Market, what is the reason? They don’t have about N60 million or N100 million to do that. GTB Asset Management now INVESTMENT ONE was able to put an investment club together where the N500, 000 or N1.0 million that is put to make up the N60 million can deliver a return that was significant within a two years space. My point is that innovative solution is providing investors with the opportunities to invest in a manner that suite their individual needs and that’s one of the things we are trying to do.

Today also, if you want to buy shares, for example you want to buy Facebook, Google or Apple shares, how many people can achieve that, you have to open an Account abroad with firms like Merrill Lynch and so on; but you know, we can provide that service for you as easily as you walk into INVESTMENT ONE, open an Account with us, for instance you want to buy Apple shares, provide your money in Dollar and we can do that for you. Also, if you want to buy the Federal Government Bond that was released, we can provide that for you; so it’s all about providing innovative solutions. What do you want? How can we help you meet your specific needs?

We also provide access to local Securities, this is my word as a Stockbroker, we can give you access to local Securities, if you want to buy shares, Bonds, Treasury Bills, if you come to INVESTMENT ONE, we can provide that service. If you want to buy Commodities abroad, if you come to us at INVESTMENT ONE, with your local account, we will trade for you offshore. We will give investors both local and offshore access to investments. Apart from these, we create opportunities for investors in the Real Estate Sector.

Do you envisage going into Merchant banking in Future considering your different services?

I cannot speak on our long term plans, but our current plan is not to become a Bank, we had a vision when we were part of GTBank, and the Bank was not planning a Company that will also be doing Banking like itself. We want to remain true to that original vision, our current focus is to meet the original vision of the Company to provide Investment Management Education and Services to the Nigerian Market; that’s really the vision we have and that’s what we are trying to do. Our goal is to be the leader in this area; as GTBank is know for its transformative work in the Nigerian Banking space, another 10 to 15 years, people should look back and see what INVESTMENT ONE is able to do as regards the investment management space in Nigeria.

As an Operator in the Nigerian Capital Market, and your past experience on Margin Loans, how are you going to guide against the temptation of doing such things?

I would say something of my understanding of what caused the crisis in year 2008 in the Financial and Capital Market Sector, people call it Margin, while that is true, fundamental to the problem is lack of investment knowledge and everyone suddenly thought they could go into the Market, come buy stocks, when it appreciates in value, they sell and get out. Nobody at that time was looking at the fundamentals of those Companies. These Firms were listed regularly on our Stock Exchange; following various Private Placements’ and nobody cared to find out if these Companies have sufficient fundamentals to justify the prices that people were paying for them. The economy was growing, but the Market was growing faster than it. People did not think of how we can absolve the kind of growth the Market was seeing when the economy is not backing it up. Though, those who were informed in the Market, saw that there was a problem, if you remember, the then Director General of the Stock Exchange, Professor (Mrs) Ndi Okereke-Onyiuke kept saying that the Market was overheating and going faster than it should, the then Governor of the CBN, Chukwuma Soludo also raised concerns.

The Market was going too fast and what we called bubble was being created and the bubble was created clearly because people were borrowing money and investing in the Market. However, this was done mainly by uninformed investors. So, what we have seen with that experience, people have grown wiser that in making investment decision, you must understand certain facts about investments.

As a Company, we provide the missing link which is why we are emphasising on Investment Education as part of our key offerings, inform investors, when this is done, they will make the right investment decisions.

Customers come to us and say they want to make 200% returns on their investments, we tell them there is a principle guiding all these, if you want to take high returns, recognise you must take abnormal risk and the risk also says you can lose everything. If people understand that, then they would start to moderate the kind of returns they want. The idea that I can get high returns at low risk; theoretically is not correct, risk and returns go together. It’s only about education and investment knowledge, if people are well informed, they will make the right decisions and we will avoid some of the crisis we have seen in the past.

From your experience and the continued improvement in the Market, what’s your projection in the First Quarter of 2013?

One, the Market has done about 27% or thereabout, while that is fantastic, we must recognise where we are coming from, the Market has been highly undervalued for several years, and part of what we are seeing now is simply correctional in terms of the valuation of some of the Companies in the Market; a good example has been the Banking Sector, it has taken a heat and as people become comfortable and have confidence that the sector has gone through the difficult phase, the Banking Stock will begin to take their true value again. A fantastic example is when you look at the PE Ratios of Banks like First Bank of Nigeria Plc, GTBank and Zenith Bank, they are great; whereas we have nonbanking stocks doing 14%, 27%, they are the likes of Cadbury, Nestle and so on. The Banking Sector has been depressed and clearly we know the antecedents to that.

Banking Sector controls more than 60% of the Market; if you exclude Dangote Cement that controls more than 70% of the Market Capitalisation and the message is simple, if that sector moves up by just one percent (1.0%) it has an overriding effect on the entire Market. This means as the Banking Sector recovers, the Market overall will show the kind of results we are seeing. The Market is doing about 27%, is it abnormal? My answer is no, its normal and expected; considering what has been the depressed state of that Sector in the past.

Our projection is that the 27% to 30% mark is what the Market will close this year; especially where it is now with a marginal uptick and I think there will be an additional increase in the Market next year, maybe by the end of the Second Quarter or the first four months of the year when the Banking Results are released and their value improves for the second time, we think there is still going to be a slight improvement in that sector, my point is as the Banking Sector improves, Market overall will get an improvement and we think that will continue primarily because that sector has been unduly depressed for a long time.

Your reactions on the recent NDIC Report that only five (5) Banks are healthy in Nigeria

First and foremost, I do not have access to that NDIC Report and cannot respond fully to it; but one thing I can say is that I think the Banking Sector is the most regulated sector in the country, we have the CBN, NDIC and AMCON all focusing on just one sector, also those that are listed will be regulated by the Nigerian Stock Exchange and Securities (NSE) and Exchange Commission (SEC). The message here is that its a highly regulated sector and because of the incidence of the past, people are more vigilant making sure that things are well done in that sector. So I will assume that better than in the past, the Sector will have moved ahead, maybe relatively about 60% to 70% or thereabout. Compared to the past, things will be better.

How do I see this playing in the Market? The Market is driven by performance; so if a Company is producing a N100 billion; such as GTBank, Zenith and First Bank has projected to do this year, we must stand back and ask ourselves from an investors point of view what this means. Let me say about seven years ago, when Banks were told to recapitalise to the tune of N25 billion, what was the Markets reaction? They said it was too much and cannot be achieved, now it’s the same Banks that are doing over N100 billion as Gross Earnings in one year; the Market has to recognise that in its pricing and if they continue that way, the price will definitely reflect. Market is driven more by performance of Companies like I said earlier. When a Company is not healthy, people want to get out it and that will determine the price of that Company.

We need a robust Capital Market, in America, the biggest investment in that Country is on Equities, and people know that they have to buy shares in Companies like Apple, Microsoft and etc; truly, they will retire on it with the dividend those Companies will be paying them. If we fail to create a new channel for investors, the country ultimately suffers from two angles, now how many of us can sleep tonight and say my future is secured, for a lot of us, we can buy shares for a N100.00 or thereabout; but to buy land, unless you are going far from the town, you need to bring out Millions of Naira and to develop the land, you need millions and how many people can afford that; so, the Market serves as an alternative to real estate.

If you cannot afford to buy a Property, you buy into Equities. To have a robust Capital Market, we must require two key benefits, the Company will benefit; which means the Country as a whole will benefit and the individuals too. For instance, if you give a Fund Manager like INVESTMENT ONE N1.0 million to manage for 25 years when you will want to retire. For instance in Nigeria, we can do 25% average per annum; in an emerging environment 25% is proper, let me prove that, fixed income, Treasury Bill is about 15%. If you put your money in a Bank, you can get 14% to 15%. If you go to Equities, it will give you more than fixed income; about 20% to 25%. Let me take an average of 25% per annum in 25 years, what will N1.0 million give to you, it will help you build for the house you need then and solve other expenses.

The US, UK and other parts of Europe show very clear examples of this, why is the US one of the world’s leading power in Capitalism? Their Companies are good; they have a robust Capital Market. You know if I have a good idea, and I can develop it, investors will put money. Young people have brilliant ideas and nobody to back them up with money here bin Nigeria. Look at the US; they are regularly listing Companies on their Stock Exchange. In the US, somebody can create Facebook and when the person lists on the Stock Exchange, the Company will worth hundreds of billions in a day.

Google came out some years ago and they later listed on the Stock Exchange. The young people in the US have a drive of starting business that they will list on the Stock Exchange and make their money. That’s what drives them to say that their way to financial freedom is to start a great business; knowing that investors will buy it off them. It’s an environment where acquisition is common; you find Google has acquired YouTube. As long as people develop something good, somebody will buy it off the person, either through the Capital Market or other ways.

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