Driving market success: How United Capital Securities became Nigeria’s #1 stock broker 

An interview with Bawo Oritsejafor, MD/CEO, United Capital Securities Ltd.

In a year when companies have struggled to navigate market turbulence, United Capital Securities has traded an impressive ₦276.86 billion year-to-date as of July 2024, cementing its position as Nigeria’s 1 top stockbroker by value.

In this interview, Bawo Oritsejafor, MD/CEO of United Capital Securities, discusses the company’s milestones over the years and highlights its effective strategy, market expertise, and innovative approach to driving success.

United Capital Securities was recently named the top stockbroker by value on the Nigerian Exchange for July 2024. Amidst market fluctuations and economic shifts, you managed to trade equities worth an impressive ₦128.524 billion, accounting for 26.4% of all stocks traded that month. Can you share the factors and strategies that have driven this sustained growth and consistency?

We deeply appreciate this recognition. Our business has seen impressive and steady growth. In March 2024, we were the leading broker by value with equity deals totaling ₦80.355 billion. By July 2024, we once again achieved the top spot, handling equities worth ₦128.524 billion – a remarkable growth of about 59.94% – and solidifying our position as the industry’s top stockbroker.

Receiving this recognition is a reflection of the hard work and commitment of our entire team. Central to our success is our outstanding workforce, particularly our skilled traders and robust research team.

Their expertise enables us to make well-informed decisions and effectively capitalize on market opportunities. Additionally, we have established a strong risk management framework that keeps us nimble and ready to adapt to market fluctuations, ensuring we safeguard and grow our clients’ investments.

In addition to this, strategic partnerships have also been a major contributor to our success. For instance, for the past few years, we have held our CEO breakfast sessions with other financial service industries to drive inter-sectoral collaborations which has broadened our horizons and created new growth opportunities.

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Digital transformation has been a key driver of our success. By digitizing our stock trading processes, we have boosted retail participation and significantly expanded our customer base. This shift has made trading more accessible and engaging for our clients. We are also dedicated to customer education; by offering insights into stock trading and its possibilities, we have empowered more individuals to confidently engage in the market. Our commitment to digital innovation and educational support helps us maintain a leading edge and provides an exceptional experience that encourages clients to return.

In essence, our success is the result of a holistic approach that combines the expertise of our workforce, strategic partnerships, cutting-edge technology, and a commitment to customer education and satisfaction.

The Nigerian stock market has excelled in 2024, emerging as the top stock market in Africa for the first half of the year. What do you think are the driving factors behind this success, and why has there been such a surge in interest, even with market fluctuations?

Indeed, the Nigerian stock market has demonstrated exceptional performance this year. Several key factors have fueled this impressive growth. A bullish market naturally attracts investment, creating a ripple effect where positive momentum encourages more investors to participate. As more individuals engage, the market continues to rise.

Another key factor has been the arrival of new market players. For example, Transcorp Power’s debut in March 2024, with a market capitalization of N1.8 trillion, marked a significant milestone. Our role as both the stock trader and lead issuing house for this listing was crucial. High-profile listings like this infuse the market with fresh capital and generate renewed interest.

Corporate earnings have also played a major role. Robust earnings reports and strategic actions from leading companies have strengthened investor confidence. At United Capital, we experienced a 65% increase in profit after tax for the first half of 2024, reaching N7.7 billion. Our year-on-year profit also rose by 38% to N15.15 billion, and total assets grew by 27% to N1.19 trillion. This strong performance, along with our interim dividend declaration of 90 kobo per share and a 2-for-1 bonus issuance, has significantly enhanced shareholder confidence and positively influenced our share price.

Technology has been transformative, making the stock market more accessible, particularly for younger investors. Digital platforms have simplified trading and increased foreign participation in the Nigerian stock market. For example, foreign portfolio inflows into the Nigerian Exchange (NGX) reached around $161.4 million in the first half of 2024.

Moreover, investor education has been essential. Enhanced awareness and understanding of market dynamics have encouraged more people to engage actively and make informed investment decisions. Together, these elements have created a vibrant and attractive investment landscape in Nigeria’s stock market.

Discussing the bank recapitalization program, the capital market is set to raise approximately ₦3 trillion for banks through this initiative. What are your thoughts on the program and its progress so far? Additionally, how is United Capital Securities positioning itself for this effort?

The Central Bank of Nigeria (CBN) introduced the bank recapitalization program to bolster the asset base of commercial banks and support economic growth, aligning with the Federal Government’s goal of reaching a US$1 trillion economy by 2030. To date, the process has been moving forward positively. While not all commercial banks have made announcements, those that have are effectively implementing innovative strategies and creative approaches to promote their offerings and engage stakeholders.

At United Capital Group, we play a pivotal role in this recapitalization process as a leading player in the capital market. Our responsibility is to facilitate the program by ensuring a smooth, transparent, and efficient capital-raising process.

On the securities trading side, we assist banks in raising additional capital by helping them issue new shares through public offers and/or rights issues, acting as an intermediary between the banks and potential investors. Our investment banking team works closely with top commercial banks, providing comprehensive financial advisory services to help them structure and execute their recapitalization plans efficiently.

With the collective wealth of experience and expertise of our professional team, we are well-positioned as a group and confident that our efforts will contribute significantly to the success of this initiative.

What benefits does the recapitalization process offer to investors, and how can they take advantage of it?

The recapitalization process offers significant advantages for investors, particularly in terms of growth potential. The banking sector is a key player in the Nigerian Exchange (NGX), which had a market capitalization of about NGN 55 trillion as of August 2024.

This influx of capital enables banks to scale and expand. By observing the announcements from banks undergoing recapitalization, investors can see their growth objectives and expansion strategies. Participating in public offers or rights issues allows investors to capitalize on these growth opportunities and potentially reap the rewards of future success.

With rights issues in particular, existing shareholders can buy additional shares at a discounted price, offering a cost-effective way to increase their stake in trusted companies. This helps maintain or boost ownership percentages, preventing dilution of their existing holdings and potentially increasing their influence in the company. There’s also potential for capital appreciation. Acquiring shares at a discount can lead to significant gains if the company performs well post-recapitalization, as share values could rise with strengthened financial positions.

To make the most of these opportunities, it is necessary for investors to conduct their due diligence, and research the company’s financial health, growth strategy, and market position to make informed decisions. It’s also important to assess one’s financial goals to ensure that investing in recapitalisation aligns with their objectives and risk tolerance.

At United Capital Securities, we provide sound guidance and resources to help investors make informed decisions based on sound fundamentals. We have also simplified access to information about the offers, ensuring clients stay informed on announcements and timelines related to recapitalisation.

Public offers and rights issues often have open and close dates, so timely communication is crucial. Customers can easily visit our website for comprehensive information and to declare their interest. Alternatively, a simple email to our customer service or stock trading team will seamlessly facilitate their participation.

In a few days, we will also be hosting a webinar exploring every facet of this topic. It is a valuable opportunity for interested investors to gain in-depth insights, ask their questions directly, and participate confidently in the recapitalisation program.

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Aside from the bank recapitalisation efforts, what other plans does United Capital Securities have for the rest of the year? What should we look forward to?

As the year progresses, United Capital Securities has several exciting developments in the pipeline. Our main focus is on increasing retail participation in the Nigerian stock market and democratizing investment opportunities. We are enhancing our technological capabilities and exploring new channels and innovative solutions to expand our market reach.

Additionally, we will be announcing several strategic partnerships and hosting our annual CEO Breakfast Forum later this year. This forum will reinforce our commitment to fostering cross-sector collaborations and driving market growth.

We aim to continuously set new industry benchmarks, so stay tuned for impactful and transformative advancements.