NOVA Merchant Bank States Investment Strategy For H2: 2021




NOVA Merchant Bank has revealed its investment strategy to drive profitability riding on the pick up of business volumes.

Managing Director/Chief Executive Officer NOVA Merchant Bank Mr Nath Ude who disclosed this in an interview with CNBC Africa, on Monday, said the bank will identify new infrastructural gaps that needed long-term funding and match them with long-term investments.

Specifically, Ude said the bank for instance would look at manufacturing and identify things needed to manufacture and what things that people need to do and seize the opportunities.

“So, the second half and remaining part of the year clearly look good.

“We went to measure our success from the impact we are bringing to the table rather than Profit Before Tax (PBT),” he stated.

He said the bond recently taken by NOVA Merchant Bank has helped in matching long-term funds with long-term investment, adding that the lender will be going into series 2 and 3 issuances.

His words: “It was a calculated strategy for NOVA and a style we want to adopt for the rest of the year. So, this is actually a funding plan and that is our strategy. We will be doing a lot of fund matching.”

Merchant banking is supposed to bridge a huge gap, especially on the infrastructure side.

Merchant banking according to Ude, a marathon and what NOVA does among others is actually to identify an existing gap and see how it can be filled.

“You know the size of the import that happened in Nigeria. You will understand that Nigeria imports almost everything but we have the capacity and what it takes to be able to manufacture and export,” he emphasized.

While acknowledging that the COVID-19 is real, Ude said the impact of the pandemic on the banking industry is huge and merchant banks are not isolated.

According to him, because of the respective restriction that is going on, businesses are adversely affected and the more businesses are affected, many business opportunities will shrink with impacts on bankable funds.

By default, the CEO said it also affects the size of businesses anyone can do

“For us as well, it reduces the opportunities you have in terms of areas we need to support as an institution.

“What then happens from the banking perspective is that there are areas that have not been growing so well, and as a result, you may not be pushing a lot of funds to support that sector.

“But the good news is that with the Vaccines uptick and what is going on in terms of the way people are beginning to accept that COVID-19 is real, we are seeing that the market is opening up and headlines are now moving up well,” he stated.

He said COVID-19 is something that everybody needs to be mindful of because “it affects every aspect of our life.”

NOVA Merchant Bank successfully issued N10 billion seven-year Subordinated Unsecured Bond under its N50billion debt issuance programme. This first bond issuance in the debt market was oversubscribed by 300 per cent.

It was one of the major corporate bond issuances by a Merchant Bank in Nigeria’s capital market, thus reflecting NOVA’s strong credit quality as well as the resilience of its business model despite current global challenges.