FBNQuest counsels firms on capital financing choices

FBNQuest, the investment banking and asset management business of FBN Holdings Plc, has cautioned and advised private mid-cap companies to carefully explore the capital financing options available in the local financial markets.

According to the company, equity and quasi-equity capital are important sources of financing for mid-cap companies seeking investment for their current operations and expansion initiatives.

It added that equity capital could be helpful to businesses because business owners can sell shares to investors to finance expansion and growth, without immediate obligation.

“Quasi-equity encompasses various loan and convertible loan options for which repayment is linked to future cash flows, but often provide more flexible payment terms than traditional loans,” FBNQuest noted.

Ijeoma Agboti, managing director, FBNQuest Funds, speaking at an event organised for financial journalists, said the current economic headwinds facing mid-cap businesses place a demand on business leaders to carefully plan their capital needs with a view to optimisation and defensive positioning.

“A difficult economic environment provides a good opportunity to re-strategise and position for recovery,” Agboti said.

“In the process, investors should decipher attractive opportunities presented by quality issuers,” she said.

While the outlook for the business environment remains uncertain over the next six months, Agboti said strong opportunities remain to bolster capital structures and to pursue strategic business prospects.

Speaking also in a presentation on the prospects for Nigeria’s macroeconomy, Tunde Abidoye, head of equity research, FBNQuest, highlighted the outlook for public debt as well as the exchange rate and inflation.

“Businesses and investors now face difficult conditions including mounting pressures on inflation and exchange rate, constrained disposable income as well growing pressure from the external sector,” Abidoye stated.

“Given the challenges on both the global and domestic fronts, it is essential for businesses and investors to have informed views on important macroeconomic variables in order to minimise business risks and to develop a long-term strategy to take advantage of opportunities as they arise,” he added.