The proceeds of the Rights Issue would support our growth – Okpala

Nonso Okpala, Group Managing Director/Chief Executive Officer, VFD Group Plc is quite impressed with the progress of the company’s ongoing Rights Issue. In this interview, he noted among others that VFD Group’s investment philosophy and execution make the difference, writes Iheanyi Nwachukwu. Excerpts

Your company recently launched N50.7billon Rights Issue. How do you view this personally?

It’s a validation of our vision and it reflects the confidence investors have in our capacity to deliver superior and sustainable returns over the long term. Fifteen years ago, we started this business with N2.5million and today, we are raising over N50billion through a Rights Issue programme. The growth has been phenomena, like no other in the Nigerian market. We have organically grown our balance sheet to over N300 billion and this additional capital would enhance our growth over the medium term, as we see tremendous opportunities for growth across our chosen markets and key growth sectors. I am quite impressed and humbled by the strong progress of the Rights Issue.

Based on preliminary report by the transaction advisers, most of the core shareholders have fulfilled their Rights and we have met relevant statutory requirements for the success of the transaction. The Securities and Exchange Commission has also approved an extension to the Acceptance Period; hence the Rights Issue would remain open till December 26 to allow full participation of all interested investors. The proceeds of the Rights Issue would support our growth, as we deepen the scale and scope of our ecosystem strategy.

What inspired you to found VFD Group and what is your investment philosophy, especially as regards your decision to start VBank?

Thanks for taking me down the memory lane. Growing up as a teenager, I was very curious, which I think shaped my analytical skills, vision and indeed, influenced my career. Perhaps I would say, with a blend of hard work, dedication and luck, I had a fast-paced career growth which exposed me to what I define as the fundamentals of business success. So, I could not rest seeing how brilliant ideas that can potentially become unicorns either never start or fail at the early stage. I see how lack of governance, weak leadership and inability to envision the future continue to limit potentially great companies. Hence, I was no longer fulfilled with what some of my friends described as “elite career path” because I believed I could do better than what my friends described as the best. Interestingly, I had friends and colleagues who had confidence in me and were ready to back up my ideas with capital. So, I started the journey with a strong firepower and the ultimate mission of diligently executing on the vision of revolutionising every segment of the market we choose.

If I take a leap to your question on VBank. The gaps are apparent, and we have seen a few players seeking to crack the nuts, but their limitation lies in not just the limitation of their strategy but also in execution. So, we set out to leverage our local knowledge and diligent execution to make a difference that can become the benchmark for the industry. Interestingly, just as we were about to launch, COVID-19 struck, and the easiest thing for most business leaders seeking to launch a new business or product at the time was to crawl back into their shells, because of the uncertainty. However, for us, it was a divine opportunity, because our strategy is a proof of concept of how digitization can deepen financial inclusion and redefine retail banking at a scale and pace never seen before. So, with the pandemic, neither us nor the market had to wait for the future we envisioned. This futuristic approach is fundamental to our investment philosophy. We take a long term approach and we are laser-focused on the vision.

What sets VFD apart from other investment companies?

Our investment philosophy and execution make the difference. We have an ecosystem approach. So, whether it’s a greenfield or brownfield investment, it must ft into our strategy. Unlike most investment firms, we do not just commit financial capital, we integrate every business in our ecosystem, harnessing synergies and institutionalising governance. We place strong premium on people and technology. Again, we have a fairly long-term horizon, and this affords us the opportunity to focus on sustainable value creation without missing the short-term milestones. I like to say every brand of laptop works; there is just none like the Mac!

As a business leader, with dozens of operating companies within your portfolio, what keeps you awake and perhaps what do you consider the most challenging issues?

Macroeconomic uncertainties, including policy and regulatory changes, is the nightmare that keeps me awake. As a visionary business leader, with long-term investment perspective, corporate planning is fundamental and the confidence to invest in the future of the economy and business remains one of the anchors for our proprietary strategy. So, whilst we have an agile strategy that ensures we are able to proactively adapt to the changing market environment, having a stable operating environment and consistent policy help to accelerate business growth. Beyond market uncertainties, having the right people and ensuring we are able to retain them is another important issue in recent times, due to the brain drain in the country over the past few years, with lots of professionals seeking career refuge and perhaps better lifestyle in developed countries. Even as we have been successful in maintaining a stable and youthful team, we continuously seek initiatives to attract and retain talents across our operating businesses and investee companies.

As a visionary leader, what excites you about Nigeria and if you are not a Nigerian, would you still have invested in this country?

Some of our foreign partners have repeatedly asked me this question and my response is simple. To start with, I do not invest in Nigeria because I am a Nigerian, rather our capital allocation is purely driven by our conviction of where we can generate alpha returns for our shareholders. Our dominant investment exposure to Nigeria is anchored on our conviction about the immense untapped opportunities in the country. We see lots of challenges in Nigeria and underneath those challenges lie opportunities. It’s like a rough diamond, and the ability to see opportunities ahead of others is what differentiate successful investors, Interestingly, we do not just see the prospects of well-run businesses in Nigeria, we reckon the risks and take measures to mitigate them. Let’s take banking for instance. Notwithstanding the efforts of commercial banks and CBN over the past decade, retail penetration level is still relatively low and that is why we see opportunities for innovation to gain strong entrance into the market. In barely five years, our banking subsidiary has become a household name. If it were to be a saturated market, even with our unrivalled strategy and diligent execution, we possibly would still be trying to establish our brand. In housing market, cap rates can be double digits, and capital appreciation can be astonishing, compared to low single digit we see in many other countries. We are big on technology, especially Fintechs, and we are excited about the opportunity to leverage the fast-growing population and prospect of passporting the offerings to neighboring West African countries. Whilst we reckon the low purchasing power amidst other factors undermining the realisation of the full potentials of opportunities in Nigeria, it remains a fertile market for investments and portends alpha returns across many growth sectors, notwithstanding our dominant capital allocation to Nigeria, we see great opportunities in selected assets in some other markets.

Beyond business growth, what drives VFD’s approach towards social impact and overall corporate social responsibility, as I see you are a big fan of supporting the community?

One of the key elements of our vision is to positively impact society and make life better for humanity. Our investment philosophy is to be the catalyst for positive change. This is why we support budding entrepreneurs and innovators with capital and governance structure that they need to succeed. We nurture innovative youths with the efficiency of articulating strategy and discipline of execution, supporting them to transform raw ideas into lucrative businesses and potential unicorns. Beyond the direct impact of our investment and businesses, we believe in giving back to the community through our corporate social responsibility. We continuously seek sustainable ways to empower people and communities. We are passionate about education, health and gender equality, as we believe these are important ingredients for economic empowerment and social justice. Our commitment to uplifting the vulnerable in our communities is deeply rooted in our philosophy of shared prosperity and our belief that everyone deserves a decent life.

You are a technology enthusiast, where do you see fintechs in the next 5 to 10 years?

I agree, I am passionate about technology and tech-driven businesses, so it’s not just about fintechs, it’s about any tech-powered innovation that is scalable. Technology affords scale efficiency and it’s a enabler for growth, so I like when the right technology is matched with the right strategy to power a business. The most capitalized companies in the world used to be utilities and industrial plants but today, the most capitalized companies are tech inclined. Think about NVIDIA, Apple, Google and even Tesla; these are all technology companies. Think about the unicorns we have seen in Nigeria and the possibilities of Fintech in this country. I am pleased to say that we have a couple of potential unicorns within our portfolio. These are tech-driven greenfield investments that we have proudly nurtured to dominate their segments in the next few years. In fact, with the right use case for Artificial Intelligence, tech-based entities are likely to soon dominate market capitalisation in Africa, like we have seen in developed markets.

Iheanyi Nwachukwu, is a creative content writer with almost two decades journalism experience writing on banking, finance, capital markets, and tax. The multiple awards winning journalist is Assistant Editor, BusinessDay. Iheanyi holds BSc Degree in Economics from Imo State University; Master of Science (MSc) Degree in Management from University of Lagos.

Iheanyi has attended several work-related trainings including (i) Advanced Writing and Reporting Skills (Pan African University, Lagos); (ii) News Agency Journalism (Indian Institute of Mass Communication {IIMC}, New Delhi, India); and (iii) Capital Markets Development and Regulations (International Law Institute {ILI} of Georgetown University, Washington DC, USA).

Other trainings Iheanyi attended include: Economic/Political Risk Analysis (By Thomson Reuters Foundation); International Financial Journalism (IFJ) (By PMA Media Training, UK); Effective Business Writing Skills (By Phillips Consulting); Reporting on Corporate Governance (By International Finance Corporation (IFC) & Thomson Reuters Foundation UK); etc. In addition, he has participated in high-level economy & markets events in Dubai, South Africa, Morocco, and other African countries like Zambia, Ghana and Gambia.

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