Following 32% revenue growth in 2023, VFD Group plans N30bn capital raise

Investment firm, VFD Group Plc has announced its intention to raise an additional thirty (30) billion naira capital to bolster its financial base and support its ambitious growth plans.

According to company secretary, Gbeminiyi Shoda the raise will be made through share issuance, global depository receipts, commercial papers, loans, convertible and non-convertible instruments, medium-term notes, and bonds.

She disclosed this at the company’s annual general meeting which was held in Lagos, yesterday.

“That directors be and are hereby authorised to raise additional capital of up to N30bn through an offer by way of issuance of shares, global depository receipts, commercial papers, loans, convertibles, or non-convertibles. medium-term notes, bonds, and/or any other instruments, either as stand-alone or by way of a programme, in such tranches, series, or proportions, at such coupon or interest rates”, she announced to shareholders.

Gbeminiyi added that the capital raise would be executed in tranches, with specific terms, such as coupon or interest rates, maturity periods, and other conditions to be determined by the company’s directors, subject to regulatory approvals.

As part of the capital raise, VFD Group’s board of directors had been authorised to enter into agreements and execute necessary documents to facilitate the fund-raising efforts. “The directors are and are hereby authorised to enter into any agreements and/or execute any other documents necessary for and/or incidental to effecting the resolutions above,” the company secretary stated.

Chairman of VFD Group, Olatunde Busari, highlighted the company’s performance for the fiscal year 2023, attributing those achievements to the unwavering support of shareholders and the dedication of the staff.

“The previous year was marked by significant milestones that have not only shaped the history of our company but also laid a robust foundation for accelerated performance in 2024. These achievements are a testament to the unwavering support and contributions of our esteemed shareholders and dedicated staff”, he said.

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VFD Group’s report: N750m loss despite a 32% revenue growth

VFD Group Plc posted a gross earning of N45.1 billion, representing a 32.6% growth from the N34.0 billion gross earnings posted in 2022. The group also posted an income of N34.3 billion from its investments. This represents a 67.5% growth from the N20.5 billion investment income posted in FY 2022.

Similarly, the group’s total assets grew by 45%, from N151.5 billion in 2022 to N219.4 billion in 2023. The group also posted a net loss of N750.4 million. This represents a decline from the N6.68 billion net profit that it posted in 2022.

Speaking on the gains, CEO, Nonso Okpala explained that the company is enjoying the gains of previous investments: “As you know, we pioneered the digital banking regime. We built it on a very robust technology. That is what we are currently enjoying today“.

The group attributed its loss to the Naira’s depreciation from ₦447 to ₦899 in its annual report summary. This sharp decline significantly increased the cost of hedge instruments it used to manage exchange rate volatility and substantially raised its overall interest expense.

Notable, the fintech subsidiary of the group, VFD Microfinance Bank posted a net loss of N211.45 million during the year, a significant decline from its N4.99 million net profit in 2022. VFD Microfinance Bank recorded an operating expense of N5.43 billion despite having an operating income of N5.2 billion.

Assurances for the future

The board assured shareholders that new measures proposed by the management would position the company to take advantage of emerging opportunities and enhance its market competitiveness.

Mr Okpala attributed the group’s net losses to a challenging year, marked by significant volatility in the FX regime:

“Unfortunately for us, most of that cost was incurred in dollars, and because of the variations in the dollar exchange rate, we had to recognize certain losses. Principally, that was one of the main reasons our performance was not as expected in 2023, in addition to a negative carry that we had in 2023“, he explained.

He assured stakeholders that the financial fortunes of the company were going to be better in 2024:

“Based on the success of the rights issue we carried out in late 2023 and early 2024, we believe the issue of the negative carry is now behind us. We’ve booked that loss, and we rest assured that with the reconstitution of the board and the retooling of management, we will see fantastic returns from that company soon.“, he said.

The company also approved the establishment of a new Capital Market Holding Group, Anchoria Capital Group Limited, subject to regulatory approvals to retain its shares presently held in Anchoria.