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Thursday, May 19, 2022

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Global Private equity assets hit $4.5 trln as FMDQ sets to release its equity guideline

The global private equity Asset Under Management (AUM) has hit $4.50 trillion in the last 10 years, just as the FMDQ Group is working to help develop local equity market.

According to the FMDQ Group Chief Executive Officer, Bola Onadele, the company is working with some private equity firms in the country on how to develop the market.

Onadele, who spoke at a webinar in Lagos on Monday said that part of these global funds were finding their way into Africa, especially Nigeria.

“Our equity guideline should be coming out very soon, FMDQ is known for bonds but we have been in discussion with venture capital community, the private equity community on how to develop this equity market for them.

“And we think its going to be a robust market for them that will help small to medium term businesses who are trying to raise capital.

“Our equity guideline will be out within a month and we will start the noting of equity securities,” he said.

He, however, urged private companies in Nigeria to tap into the opportunities in the market for growth and development.

“As is the case in global private markets (PE) where private equity accounts for 60 percent of total AUM, private markets in Africa and Nigeria is dominated by the PE segment,” he added.

Onadele, who was represented by the Head, Private Capital, FMDQ Private Markets Ltd., Yemi Osinubi, said that recent survey showed that Nigeria ranks second in the attractiveness of African countries for PE investments over the last three years. 

He said that healthcare and life sciences, technology, and agribusiness were viewed as the most attractive sectors over the next three years.

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Onadele attributed the shift to private capital to the global liquidity crisis of 2008 and 2010.

He noted that traditional source of capital has become less available because of the tightening of the Basel two requirements for banks.

“Private equity AUM has gone up four times since 2002, since 2015 worth of private equity deal volume has exceeded equity deal in volume,” he said.
Onadele said that institutional investors across the world were seeking alternative channels on their growing funds, especially in infrastructure funds.
Onadele disclosed that the FMDQ had witnessed about N264 billion in notes since it was set up in 2020. 

“In 2020, about N100 billion in private company bonds were noted on the platform, this half year alone we have about N153 billion in noting.

“We had a mix of promissory notes, corporate bonds, Sukuk bonds and we are having first Green Bond that will be noted in the coming month also.
Speaking on the drivers for PE, he added that raising capital in the public markets  comes with high regulatory requirements and the cost of compliance for public companies were high.
“As such, many companies prefer to remain private for as long as possible and take advantage of the private capital market,”Onadele said.
He noted that the private markets give investors access to uncommon investment opportunities while providing diversification benefits.
He noted that the primary goal for the establishment of FMDQ Private Markets Ltd was to democratise the capital markets by promoting the inclusion of private companies and unleash the largely untapped pool of private capital in Nigeria.

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