FCMB Group Plc said its pensions arm, FCMB Pensions Limited has entered into an agreement to acquire 96 per cent of AIICO Pensions Limited.
In a notification on the Nigerian Stock Exchange (NSE), the Group said, “This appears to be part of a deliberate strategy to grow the Group’s investment management portfolio and build on the inherent synergies between this and banking.”
The proposed sale will see a full uptake of AIICO’s 70 per cent stake in the company and the 26 per cent held by other shareholders in AIICO Pensions Ltd. It will be recalled that FCMB Group increased its stake in Legacy Pensions (now FCMB Pensions) to 91.6 per cent in 2019 and now has full control of the business.
However, the proposed transaction is subject to the approvals of the National Pension Commission (PenCom) and the Federal Competition and Consumer Protection Commission (FCCPC).
Speaking on the divestment plan, the managing director/CEO, AIICO Insurance Plc, Mr Babatunde Fajemirokun, said they will “deploy the ensuing capital in other assets where AIICO has a stronger competitive advantage, thereby, maximising long-term value for its stakeholders and not driven by the company’s recapitalisation plans.”
Speaking about the announcement, chairman of the board of directors of FCMB Pensions, Mr Ladi Balogun, said 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.
FCMB Pensions has since grown its assets under management (AUM) to N325 billion with 350,000 customers as at March 2020, while that 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 entire Group’s 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 205 branches, a strong web and mobile presence; and the recent the launch of its pensions’ online enrolment platform.
Financial analysts expressed positive views that the acquisition will impact on both FCMB Pensions and FCMB Group. One investment banking analyst 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 this as a landmark transaction giving a mid-tier player a great opportunity to bulk up, saying 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 industry braces 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.