FCMB Pensions Agrees to Acquire 96% of AIICO Pension
Analysts have already expressed broadly positive views of the impact of the acquisition for both FCMB Pensions and FCMB Group.
FCMB Group has notified the Nigerian Stock Exchange (NSE) that it’s pensions arm, FCMB Pensions Limited, has entered into an agreement to acquire 96% of AIICO Pensions Limited. The notification was published on the NSE’s website on Friday.
This appears to be part of a deliberate strategy to grow the Group’s investment management portfolio and build on the inherent synergies between pension and banking. It will be recalled that FCMB Group increased its stake in Legacy Pensions (now FCMB Pensions) to 91.6 percent in 2019. The Group now has full control of the business.
FCMB Pensions has since grown its assets under management (AUM) to N325 billion with 350,000 customers as at March 2020, while the AUM of AIICO Pensions is estimated at N126 billion with over 240,000. A combined AUM of N451 billion and almost 600,000 customers will take the Group’s entire customer base to 8,000,000 and its total AUM (inclusive of all investment management activities) to over N560 billion. In addition, the enlarged pension business will benefit from FCMB’s extensive distribution platform, comprising of 200 branches, a strong web and mobile presence; and the recent launch of its pension online enrolment platform.
Analysts have already expressed broadly positive views of the impact of the acquisition for both FCMB Pensions and FCMB Group. An investment banking analyst who preferred not to me mentioned, described it as “a positive move and a statement of intent from FCMB’s management to leverage its non-banking businesses to drive profitability.” Another analyst described it as a “Landmark transaction giving a mid-tier player a great opportunity to bulk up.” He further noted that, “We believe the combined entity will be better positioned for stronger organic AUM growth and fee income contribution to the Group’s performance."
This acquisition is one of several proactive steps, along with digitisation that the company has embarked upon to enhance its market position and competitiveness as the pension industry positions itself for the commencement of Retirement Savings Account (RSA) portability.
Investment funds’ performance is also receiving greater attention, especially in the low interest rate environment. In this regard, FCMB Pensions has strengthened its investment committee with the addition of Mrs. Titi Odunfa Adeoye to its Board of Directors. Mrs. Adeoye is the Founder and Chief Investment Officer of Sankore. The new Director holds an MBA from Harvard Business School, a BBA in Accounting (summa cum laude) from Howard University and is a Certified Public Accountant (Gold Award). Mrs. Adeoye's skills in investment strategy were honed at firms like Goldman Sachs in New York. Her area of expertise is strategies for the creation, growth and preservation of individual or family wealth with a focus on "alternative" asset classes.
Speaking on the planned acquisition, Ladi Balogun, Group CEO of FCMB Group and Chairman of the Board of Directors, FCMB Pensions, remarked that, "the business intends to use its scale to positive effect towards investing in the growth of the Nigerian economy while ensuring safety and the most competitive returns for its customers.”
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