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Monday, March 27, 2023

NGX Borrows N14.5bn to Finance CSCS Stake Purchase

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The Nigeria Exchange Group (NGX) has taken on a term loan which increased its borrowings to the tune of N14.52 billion to help finance an investment in securities clearing firm CSCS in which it seeks to increase its equity stake.

MoneyCentral exclusively reported earlier that the NGX had made a N14.1 billion deposit to that effect.

Central Securities Clearing System Plc or (CSCS) is Nigeria’s Central Securities Depository (CSD) licensed to carry on the depository, clearing and settlement of all transactions in the Nigerian Capital Market.

In its June 2022 financial statement, NGX said the jump in borrowings from zero in 2021 to N14.52 billion in June 2022: “represent loan to finance strategic investment.”

As a result of the new borrowings NGX finance cost jumped to N1.339 billion from nil in June 2021.

CSCS declared the sum of 74k for every share held as dividend for the 2021 financial year, bringing the total dividend payable to N3.7 billion.

The Nigerian Exchange Group Plc is currently the largest shareholder in CSCS with a 29.19% stake. Other major shareholders include Artemis Limited with 16.61%, Ess-ay Investments Limited 10.01%, Access Bank Plc 7.50%, United Bank for Africa Plc 5.37%, VFD Group Plc 5.17% and ZPC/ Leadway Insurance Investment Account 5%.

CSCS which closed trading on the NASD OTC exchange on Friday at N14.91 per share has a market capitalization of N74.55 billion.

That means the NGX could acquire an additional 19.45% of CSCS potentially increasing its stake to 48.64% and solidifying its ownership as the largest shareholder.

The NGX closed trading at N20.6 per share on Friday and has a market capitalization of N40.376 billion, meaning its valuation is about half that of CSCS.

The CSCS reported revenues of N6.4 billion and profit of N4.41 billion in 2021, which compares with NGX with reported revenues of N6.79 billion and profit of N2.24 billion for 2021.

The NGX reported after-tax profit of N820.16 million in the 6months period to June 2022.

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