Nestle S.A joins foreign investors reinvesting dividends in local units
By Oludare Mayowa
Nestle S.A on Monday became the third foreign shareholders to reinvest part of their dividends payout from last year’s earnings back to increase their stakes in their local subsidiary.
The foreign shareholder in Nestle Nigeria bought 636,384 units of the local subsidiary shares on the floor of the Nigerian Stock Exchange (NSE), the company said in a regulatory filing.
Nestle S.A through the share purchase injected a total of N747.54 million to further raised its stake in the local unit.
Apart from Nestlé S.A, Switzerland, with 524,559,457 ordinary shares, representing 66.18 percent in the local unit, Stanbic IBTC Nominees Limited holds 8.53 percent in the company and the rest by local individual shareholders.
Nestle Nigeria had declared and paid a total of N50.33 billion in dividends to its shareholders at the end of the 2019 financial year. The local unit posted total earnings of N284.03 billion revenue and N71.12 billion in profit before tax at the end of last year.
Heineken Brouwerijen B.V, majority shareholders in the Nigerian Breweries Plc has continued to reinvest part of its dividend payout into the local unit in the last couple of weeks.
Same goes for Unilever Overseas Holdings BV, which controls 70 percent majority stake in Unilever Nigeria, which has also bought some shares of the local unit on the floor of the NSE>
Faced with difficulties in buying dollars to repatriate their dividends back to their home countries, some foreign shareholders are converting their payout into buying more shares in their local units.
Nigeria is currently facing a dollar shortage as the Central Bank of Nigeria (CBN) ratio foreign currency to endusers in the face of dwindling forex earnings from crude oil exports.
READ NESTLE S.A NOTICE: NESTLE S.A Share purchase notice
Nestle Nigeria Plc is a food manufacturing and marketing company in Nigeria and a subsidiary of the largest food and beverage company in the world. The company produces an extensive range of products for the retail and wholesale sectors.
Also, many Foreign Portfolio Investors have not been able to get their funds out of the country since March as the CBN urge them to wait till things improved and the country earns more dollars to meet its obligations.
Many firms and offshore portfolio investors have been in the queue to buy dollars to enable them to repatriate their funds back to their own countries for months now without success.
After weeks of frustrations, many of the foreign shareholders in the local units have been investing back such dividends in the shares of their local units in a bid to reduce loss and erosion of their money due to the rapid depreciation of the local currency.
Nigerian naira has lost about 18 percent in value since March when the CBN officially devalued the naira on its window and follow up with another devaluation last month in its bid to conserve foreign reserves that have plummeted by as much as 22 percent since last year and lost more than 6 percent this year alone.
Last week, Guaranty Trust Bank (GTB) said payment of dividends to holders of its Global Depository Receipts (GDRs) has been delayed due to difficulties in sourcing dollars.
The lender said in a note to GDR holders that its registrar – the company which maintains lists of bond and shareholders – was in a queue with the Central Bank of Nigeria (CBN) to purchase dollars to enable it pay the dividends to the GDRs holders.
The Nigeria’s currency closed at N477 to the dollar on the parallel market and N386 per dollar on the Investors and Exporters’ (I&E) window on Monday.
Also, the country’s foreign exchange buffers were down to $35.59 billion by August 20, from $38.53 billion by January 2, this year.#GFD