Cash is King

He with the keys to the vault will always be better placed to take advantage of the window of opportunity, whenever it beckons. Olówó ló l’òwò.

Cash is king. Credit, the Prince. Ready access to funds – one’s own or leveraged, helps with one foot inside, with opportunities that really matter. Even as custodian of other people’s money, the opportunities that come with it are plenty. There you are, at the ringside, as people with ideas, solutions and opportunities come knocking, in search of funding. Without funds, labour is often in vain.

A month back, MTN Nigeria announced what was reported as the largest ever revenue by a publicly listed company in Nigeria. N1.346 trillion revenue for the year 2020. Having consistently delivered over the years a 10+% growth in revenue, doing N824 billion as far back as 2014, it is no surprise that MTNN would hit that mark. It has been interesting following the growth trajectory of the company over the last 20 years.

As I thought about how far MTN as a company has come so did the mind go to what must be the good fortune of early investors in the project and how much gold they have undoubtedly struck. I imagine what comes to the mind of the Octogenarian, Paschal Dozie, reminiscing on the project. I wonder if Okechukwu Enelamah, Chief Shonekan, Mr Hayatudeen and other partners in the private equity firm which invested back then, saw the future as bright as it eventually turned out.

So good was it that by the time they were exiting with their first round of funding of $35 million, the return was 10 times over and the company valued at $400 million at entry was worth $13 billion at exit in 2012. No wonder, they followed up with 2 more rounds of funding, under CAPE II and III, taking advantage of the global financial crisis to move in at a low.

As good as the MTN proposition was, at every point where the window of opportunity opened, even for the few who got to know, it was always about having some huge sacks to be able to buy in. 2007/8, there was a window of opportunity with the private placement.

But it was a tall order. The minimum subscription for the corporate was said to have been put at $10 million and for individuals, $5 million. I can’t recollect if that eventually came down to $1million. A lot of requirements also laid out. One million dollars was a lot then and even now.
Given how steep it was to access, some investment companies created SPVs to pool funds together for investment. There was one such SPV set up by Afrinvest with a minimum subscription of $10,000, which some of us keyed into. The understanding was of conversion into substantive shares when the company goes public.

With MTN eventually footdragging on going public and possibly, other reasons by Afrinvest, the SPV was dissolved in 2013. But then, between 2008 and 2013, even with the administrative fees, the 13 dividend payments was some healthy ROI.

If those with only a straw in the bottle had so much to drink, one can only imagine what the early investors must have been able to suck before finally putting the basket out last year, via public listing. Profit per share for 2014 was N513.47 and N357.87 for 2018.

At listing by introduction, MTNN had a share capital of 557,000,000 divided into 27,850,000,000 units. Listed were 20,354,513,050 at N0.02 per unit. With the share split and shares listed at N90, which has since gone as high as N160, one can only imagine the multiple gains and returns many times over for the investors. But that is what it is for the early investors. Only that opportunities such as this are often only open to the HNIs. Olówó ló l’òwò.

There is a reason why those whose eggs were laid in Banking have found it easier to move on to start, take control, build upon and expand other enterprises elsewhere. There is a reason why, beyond other things, the Ovias, Elumelus, Dozies, Adeolas, etc., leaving out those who moved on and failed at it, are dominant players in different sectors. This also applies to an extent to the Dangotes, for whom leverage on strong credit lines has also been instrumental in pushing forward. Olówó ló l’òwò.

Cash is king. Credit, the prince. I often wonder about our cultural disposition towards credit when we know that Olówó ló l’òwò. We must find a way around our structural deficiencies, systemic challenges and socio-cultural inhibitions to democratise access to credit, to trigger growth and prosperity from the bottom.

Well, opportunities like this are not common. But opportunities will always come, no matter how little. The important thing is to key in, with whatever one has, no matter how little. Who knows?
Olówó ló l’òwò.

Written by By Simbo Olorunfemi

09. 04. 2021

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