FBNQuest, the investment banking and asset management business of FBN Holdings Plc, is advising 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,” it added.
Speaking at a event organised for financial journalists, Managing Director, FBNQuest Funds, Ijeoma Agboti, said that the current economic headwinds facing mid-cap businesses place a demand on business leaders to carefully plan their capital needs with a view to optimization and defensive positioning.
The Head of the Equity Research, FBNQuest, Tunde Abidoye, in a presentation, spoke on the prospects for Nigeria’s macroeconomy, highlighting the outlook for public debt, the exchange rate and inflation.
Abidoye stated that “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.
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.”
However, Agboti said that while the outlook for the business environment remains uncertain over the next six months, strong opportunities remain to bolster capital structures and to pursue strategic business prospects.
She added, “A difficult economic environment provides a good opportunity to re-strategize and position for recovery.” She says. In the process, investors should decipher attractive opportunities presented by quality issuers.”