'Integrity is key
to success in stockbroking business'
By EMEKA OKOROANYANWU, OMODELE ADIGUN and OYIADIKA
ODOR
Monday, April 21, 2008
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Mazi Unegbu
Photo: Sun News Publishing |
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To be a force to reckon with in the business world, you must
make integrity your watchword. According to Mazi Okechukwu
Chris Unegbu , the Managing Director of Maxifund Investment
& Securities Plc, “everything is not about money
but everything is about your integrity; your name:
How do you see your name? And once your name is good, investors
would be happy to leave their money with you and go to sleep,
so that their money can work for them.”
Looking at this speaker, one cannot but be convinced that
he is a man that knows his onions, a force to be reckoned
with as far as the Nigerian business terrain is concerned.
Apart from being the last helmsman that successfully steered
the defunct Citizens Bank of Nigeria through the banking consolidation
exercise, he was also a former president of the Chartered
Institute of Bankers of Nigeria (CIBN) and one of the people
who midwived the birth of Spring Bank Plc.
The man is now on the threshold of making another history.
He is taking his house, Maxifund Investment & Securities
Plc, to the capital market. This move, according to him, is
to diversify into other areas of business and as well define
financial character in the country.
His words:“ We want to diversify into other areas of
financial businesses. Now, we want to go into fund management.
Fund management is very demanding. We want to have the necessary
attributes for it and all it takes to do it, including personnel,
information technology network (IT) etc. Second, we want to
go into the work of an issuing house and I believe we are
going to have more money.
Third, we want to go into other areas of finance such as micro
finance by which we intend to see how we can help people at
the grassroots get the necessary funds to do business. I have
noticed that our banking system does not favour giving loans
to the grassroots people all because the operators are ever
in a hurry to make profit even in the first year of operation.
No business can make profit in the first year. Banking philosophy
is predicated on mutual service between the borrower and the
lender to grow in business. We think we can go into the microfinance
sector and see how we can make impact on those undiscovered
by the conventional banks.”In this piece, he explains
more.
Background
My name is Okechukwu Unegbu, past president of the Chartered
Institute of Bankers, Nigeria (CIBN), past Managing Director/CEO
of Citizens International Bank Limited , one of the banks
that metamorphosed into Spring Bank Plc. I am also a lawyer.
I had my first degree in Banking and Finance, University of
Nigeria, Nsukka; second degree also in Banking and Finance,
from the University of Ibadan and a Law degree from University
of Lagos. I am the Managing Director/Chief Executive Officer
of Maxifund Investment & Securities Limited now Maxifund
Investment and Securities Plc because we have just converted
with a view to doing further and better than what we have
been doing before now.
The company
The company was founded in 1993. It was not initially a stockbroking
firm at all. The name of the company then was Sterling Securities
Limited. The company had some form of problems. So, in 1997
when I retired as executive chairman of Progress Bank, we
had to take over the company. We bought the company and restructured
it into what is known today as Maxifund Investment & Securities
Plc. At that time, what we had was N20 million as capitalisation.
Later, we were asked by the Securities and Exchange Commission(SEC)
to increase to N70 million which we did, using our retained
earnings, some of our shareholders brought money plus our
assets too, we were able to recapitalise up to N70 million.
Even before the recapitalization to N70 million, the company
was originally situated at Igbosere in Lagos Island going
through a very difficult time because at that time, we had
no operational licence as an investment and securities company,
yet we were carrying heavy overhead costs – paying salaries
of workers, rents etc. So, by the time we got the licence,
through the assistance of Alhaji Otiti, we had a negative
shareholders’ fund of about N18 million. So, it was
difficult for us. But by the time we moved from Igbosere to
the Stock Exchange building, we started doing very well. And
in about three to four years afterwards, we wrote off the
N18 million debit and started on the upward trend and our
performance remained so until I was called up to go and revive
Citizens International Bank. When I left, of course, that
had effect on the company and its fortune came down again.
Not that we made losses, but it could not continue on the
upward trend. In fact, when I was leaving , from a negative
position , we had a suplus of about N10 million.We had even
paid dividend before then.
In 2003, we recorded a profit of about N1.57 million. It climbed
to N10.7 million in 2004. In 2005 when I went to revive Citizens
Bank, the company recorded a loss of N1.75 million. But by
2006 when I came back , we had a profit of N1.6 million. And
in 2007, we recorded profit after tax and other income of
about N15.8 million.The trend has been up. And this was all
based on N70 million capitalisation. And this year, we have
proposed 10 kobo per share dividend to be paid to our shareholders
which, according to industry rate, is very good.
Based on all these and the belief that the capitalisation
of stockbroking firms would be moved up, we decided in 2006
to do private placement. Before they announced the N1 billion
capitalisation, we had finished almost everything. We were
looking for N500 million, believing that the new capital base
would not go above N250 million, but it was a surprising thing
to us that it was put at N1 billion. But by November 16 2006,
when we finished the exercise, it was over-subscribed we were
initially looking for N500 million. But what we have as of
today is N680 million. We sold the shares at N1.20 per share
and it was over-subscribed. We now have about 383 shareholders
as of today.
And we selected our shareholders to avoid shareholders who
would do money laundering. We screened all of them, to make
sure we are not going to have problem of rejected shareholders.
And as I am talking to you, we have prepared all the share
certificates.
By the time we list the shares , we intend to go to the capital
market again to raise more fund because we want to do other
businesses like going into other areas of financial services
sector in the country. We, indeed, have the capacity and capability
and we have the customers and clientele base to be able to
do this.
However, we are not the biggest in the market. But we have
got a fairly good share of the market since we started and
this has given us the much needed confidence to go deeper
into this business. For example in 2006, we made a transaction
turnover of over 1.6 billion in volume and about 4.2 billion
in 2007, which shows that there is a lot of customer confidence
in what we are doing. And as our logo says we want to really
redefine financial character. And I can proudly tell you that
since we started business there has never been a single complaint
from any investor about giving money and not receiving the
desired service for which the money was given. We believe
we should be able to show good example of how people should
do businesses and have confidence of the investors.
Diversification
Subject to the approval of our board of directors, we intend
to raise between N3 billion to N5 billion by the grace of
God by next June since from our record, we have almost hit
N1 billion recapitalisation target, so this has given us the
challenge to do more. That is why we are thinking of raising
that amount of money. We want to diversify into other areas
of financial businesses. Now, we want to go into fund management.
Fund management is very demanding. We want to have the necessary
attributes for it and all it takes to do it, including personnel,
information technology network (IT) etc. Second, we want to
go into the work of an issuing house and I believe we are
going to have more money.
Third, we want to go into other areas of finance such as
micro finance by which we intend to see how we can help people
at the grassroots get the necessary fund to do business. I
have noticed that our banking system does not favour giving
loans to the grassroots people all because the operators are
ever in a hurry to make profit even in the first year of operation.
No business can make profit in the first year. Even your company,
The Sun, you would agree with me, never made profit in the
first year. Banking philosophy is predicated on mutual service
between the borrower and the lender to grow in business. We
think we can go into the microfinance sector and see how we
can make impact on those undiscovered by the conventional
banks. We did some work for a few micrfinance banks, the way
they operate is very amusing. I keep asking them, why do you
want to do like the conventional banks? You don’t have
to insist so much on physical security as collateral for loan.
As long as you can get people to come in groups, they would
be in position to create a security and as the people begin
to come, then you have to find other ways of building wealth,
using their liabilities. For example, why not ask a customer
who comes today with N50, 000 borrowed from you to save money
meant for esusu with your bank? You see, many of these traders
gives N500 or N5,000 every week to the esusu people. At the
end of the month, they lose the money to these people. But
they could invest the money in the bank in addition to not
losing it, they will also earn interest on it.You can convince
them to do the N5,000 monthly and use the money to play for
them in the capital market.That way, you are encouraging them
to build up security that they can use when they require very
big money. People will have to do that but as of now , I have
not seen any of the micro-finance banks addressing that. I
don’t want to give you money and lose that money. I
want to give you money and ensure that you succeed and I succeed.
I think that is the basis of banking.
Prospective investors
We will first of all assure prospective investors of the integrity
the organisation. I told you today there is a need to define
financial character in Nigeria. Everything is not about money
but everything is about your integrity, your name: How do
you see your name? And once your name is good, investors would
be happy to leave their money with you and go to sleep, so
that their money work for them. We will also tell them that
once you invest, we assure you of adequate returns on your
investment.We will tell people that we can guarantee a certain
percentage of returns on investment at the end of every year
and some will invest their money and at the end of the period,
you would see them smile to the bank.
There is this fear, which I must correct; the Nigerian Stock
Exchange (NSE) will crash. I sincerely do not see that happening
because the system has been so built that the stocks in our
market are still growing. All these are virgin stocks that
have not reached their top. I know they will continue to grow
and as the time goes on reach their top
In fact, people are ignorant about the stock market. Remember
when Abacha was doing all the razz-ma-tazz in the country,
it was difficult for him to penetrate the Nigerian Stock Exchange,
very very difficult. He couldn’t do anything about it.
He didn’t understand it. So, many Nigerians don’t
even understand the Nigerian stock market. For example, the
Ibos are now coming, But when statrted, 95 per cent of my
clients were mostly Yoruba. But now the Ibo are coming to
the market. They are getting to know what it is all about.
Before now, they didn’t know about it, they didn’t
want to listen if you tell them about it. When we started,
we organised seminars at Alaba International, in Aba, Onitsha,
Owerri, Umuahia and Akwa Ibom. I tell you but they did not
understand what we were doing. When we told them, they would
say, oh you mean I should give N100, 000 and I have to wait
for one year before I can expect returns when I know that
I can import one container and before I know it, I will have
my money back. But they were short sighted not knowing that
government policy could destroy that container and he won’t
import anything again. So, we have a lot of messages for our
clients, investors and our prospective investors. Be assured
of our integrity, proper advice on your investment, we assure
you of adequate returns on your investment. We also assure
you that we will continue to be your friend as long as you
continue to be with us. We have what is called core values
which is our patience, commitment and excellence. Patience
in ensuring that we grow with the clients because the market
is not the market that is in a hurry to grow. Two, we have
to be commited to them the way we will want them to commit
themselves to us. At the end of the day , we want to achieve
excellence. What we are really looking for is a situation
where we can make impact on our immediate environment and
finally we want to create the right perspective for social
responsibility not only in money but in core values. Values
of integrity, values of consistency, values of doing the right
thing at the right time.
Nigerian capital market vs others
Comparing Nigerian capital with those outside, I would say
that Nigeria is an emerging market – very much emerging.
One of the best paying in terms of returns on investment,
in terms of all manners of factors. And Nigeria’s emerging
market is one of the best. There are other emerging markets,
but the beauty of Nigeria is that it has very big population,
very big land mass and the people are just coming on to the
stage. That’s why I told you before that you can not
talk of a collapse now or even reaching the top now until
may be the next 20 years when people get used to it and come
to the market stage and get themselves on. Our market is so
insulated from the hiccups of the international market. For
instance, when American market startedfalling, South Africa
followed suit, and European market followed it because they
are all linked to the US market. But we are not. Our companies
are local companies quoted on our stock exchange that has
no link with the American market. That is the beauty of our
market. And that is what makes it special among other markets.
Some years back, we were on manual, open box system. But now
everything is done electronically. And we are now able to
do millions of trade every day because of the Central Securities
Clearing System (CSCS). And you hear billions of Naira changing
hands. It is because of the automated system and the CSCS
that has made it seamless for us to trade. Ican trade from
anywhere now. I don’t need to go to the trading floor
to trade.
Management style
First of all, you must have integrity. After that, you must
believe that God who gave you all that will also assist you
to continue to work in that line. You know by the time I returned
to the company after the Citizens Bank job, I discovered that
I have lost some quality clients. So, I went after them that
I am back. So, what is your problem? They complain that they
didn’t get this , they didn’t get that because
information is money. If I take your money from you, I must
tell you what I have done with the noney. Now, we have very
active website, where you can log in to see the statement
of accounts, see what stocks we have bought for you, your
stock position at any point in time. A customer that you have
, in your marketing, you must be able to ask him simple questions
like what should I do for you? What is it that you want? Simple
simple questions.With your smiling face, once you get the
guy to believe in you, if he leaves you , you will get him
back. What is happening in our system is that those we employed
to do the work are only behaving as if they are doing you
a favour instead of the other way round.They don’t know
that we are here because you come here. But if you don’t
come, we just close shop. One of the good things that has
really worked for us is that we let people have information
all the time, we don’t keep them in the dark. You just
don’t think, you have to realise that your actions can
make impact on many people.One satisfied client assures you
of 10 other clients coming without your marketing them. So,
the best management style is having integrity, ability to
let people know what you are doing, ability to forecast and
then deliver on that forecast.Once you are able to do this,
people will believe in you.
As a visiting lecturer in the University of Lagos, each time
I go to class, I always take 15 minutes out of the two-hour
lecture to talk about morals of business or ethics of business.You
need to let Nigerians out there know how they can take care
of themselves rather than depending on the government. And
we are begging government to make business environment very
friendly.
Unwinding
First of all, I read a lot. I have so many books in my library
here in my office. Even when I am in the car. Then after that
, I play tennis at the club, at Ikoyi Club most of the times.
Then early in the morning on Saturdays and Sundays, I go jogging.
After that, I would come home, observe our morning prayer,
go to church and then come back. Then stay with my family
and let the children know how I make my money. Most people
don’t tell their children how they make their money.
They would be telling fables to their children and the children
will grow with it thinking that that is how money is made.
I am also a visiting lecturer at the University of Lagos where
I teach Banking and Commercial Law. I read and write a lot
even in the middle of the night if an idea comes to my head
, you will see me wake up, put on the light and jot it down
because I may probably forget it when I wake up in the morning.Then
in the morning, I will take a book develop the idea into something
that I will publish. |
