A REIT to bell a quiet IPO market
There are so many ways that executives can look at the investment environment and take the decision to either invest their money or seek for investors’ money to pursue a project. But once he went public on Tuesday to announce an initial public offering (IPO), Hakeem Ogunniran, the chief executive of UACN Property Development Company (UPDC), immediately knew he was sticking out his neck.
And, indeed, you can call it a very healthy sticking out of the neck. This is because just when everybody was beginning to ask when the IPO season would return to the capital market after more than two years of a lull, Ogunniran comes out to say, “Let’s get the party started.” This is a bold move for this trained la wyer, chartered secretary and arbitrator who has spent a considerable amount of his career time with the UAC Group. The size of this bold move can be measured from the standpoint of a dead IPO market that everybody has been waiting for some other person to take the first step. For, even though everybody wanted to see some action take place in the market, nobody seemed willing to test the waters. There was an unspoken fear of the possibility of failure.
It has been surprising, to say the least, the hesitation that we have noticed in terms of expected reactions, particularly in the capital market. Since 2007/8 the market has been fighting to get its groove back. It has managed to make slow and little progress, and is still unable to muster the kind of traction that should get investors swamping back. It is still early days, many have said, with a lot more still observing serious caution. Especially of interest is the drought that seems to have gripped the market in terms of Initial Public Offerings (IPOs) or completely new listings altogether.
Yet, there was enough reason to be confident and to plunge into as soon as the smoke was clearing off the gunpowder as the year opened. For in the one or two months before the curtains were drawn on 2012, the local and international analyst community came alive ‘poking’ their long noses into 2013 in what is now a yearly ritual of taking a long view and trying to project what the year portends for Nigeria.
There were a lot of positive vibes about the year and Nigeria; and it all seems so natural, especially knowing that once you have hit the bottom the only other way to go is UP. We have followed the money, nay, the mouths of analysts, here at BusinessDay and carried stories with the following headlines: “Nigeria set to maintain positive macro indices in 2013”; “Agric, construction, power to drive investment in 2013”; “Analysts welcome 2013 with optimism, high expectations”. The effusion of so much positive vibes running into the immediate opening of the new year was not lost on senior Nigeria executives running companies. In fact, decision-making corporate executives love such positive vibes.
Ogunniran’s IPO is a Real Estate Investment Trust (REIT) worth N30 billion divided into three billion units of N10 each. It will go by the name UPDC Real Estate Investment Trust. The size of Nigeria’s population makes housing its citizens an issue, with a huge housing deficit that is not helped by access to finance and land for development by those who wish to own their own property.
“When you are looking at REIT, you first look at the sponsors before the offer assets. The asset of the REIT are already there and they are fully tenanted and no vacancy,” Ogunniran said during the completion board meeting for this offer.
He is bullish about what this UPDC REIT offers investors when he says, “Investors in the REIT will enjoy benefits such as immediate investment income, stable and regular distributions of dividends and exposure to a diversified property portfolio of income generating assets.”
Ogunniran knows he is running a company with a strong pedigree in property development and management in Nigeria. That is why he assures investors that the company can deliver on its promises every time. “UPDC is a company that has been around for a long time. It has all it takes to deliver on its promises made in the prospectus to investors on this offer,” he said.
The confidence that Ogunniran exudes in relation to this REIT offer is not misplaced. Apart from UPDC, the other parties to the offer are formidable players in the Nigerian market and are globally recognised also. For instance, FSDH Asset Management Limited is the fund manager to the offer; Stanbic IBTC is the lead issuing house/receiving bank; while BGL plc is the co-issuing house to the offer. Others are Udo Udoma & Belo Osagie (solicitors to the joint trustees); Detail Commercial Solicitors (solicitors to the offer); Stanbic IBTC Stockbrokers Limited (joint stockbrokers to the offer); FBN Securities Limited (joint stockbrokers to the offer); FSDH Securities Limited (joint stockbrokers to the offer); and Ernst&Young (reporting accountants).
Other parties are First Trustee Nigeria Limited (joint trustees to the REIT); UBA Trustees Limited (joint trustees to the REIT); UBA plc – Global Investor Services Division (custodian); Global Credit Rating Company (rating agency); Jide Taiwo & Co (estate valuers); Joe Akhigbe & Associates (estate valuers); and First Registrars Nigeria Limited (registrars to the offer).
There are many who would be watching what happens to this heralding IPO. It won’t be just because it is the first one, it would also be because of its specialised nature, as a REIT IPO. But attention would also be on the man who heads up UPDC, whose company is spearheading this potentially huge market resurgence.
Ogunniran has been CEO and board member of UACN Property Development Co plc since January 13, 2010. A trained lawyer, he holds LL.B, LL.M and MBA degrees from the University of Lagos. He was formerly a Law lecturer at the University of Lagos before joining UAC of Nigeria plc as manager, legal services in 1995. He is the immediate past divisional managing director of MDS Logistics Division of UACN and the immediate past president and chairman of council of the Institute of Chartered Secretaries and Administrators of Nigeria.
Ogunniran leads a UPDC that is regarded as a leading light in property development in Nigeria and the company seems to have achieved the most under Ogunniran. In spite of the slowdown and the credit challenges in the property market, UPDC is developing and selling its high-end properties with ease and Ogunniran readily explains to you: “As market leaders, there’s no magic or secret in what we are doing; at UPDC, real estate development is our business; we have been in this market for a long time; we understand both the market and the industry well.
“Over the years, we have been able to build a platform that enables us to deliver housing in the market place. So, we are self-sufficient to continue to deliver more housing.”
Ogunniran has supervised the construction of the iconic and towering Victoria Mall on Bishop Abayande Cole Street, Victoria Island; Grandville Estate on Ladoke Akintola Street, Ikeja GRA; Metro Garden in Lekki Phase One; Green Cameron Estate in Ikoyi; Emerald Court in Abuja, among others.
