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The Race to N5bn capital base by PFAs

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In April of last year, the National Pension Commission (PenCom) approved an increase in the minimum share capital of pension fund administrators from N1 billion to N5 billion. The PenCom gave the operators a year to comply with the additional capital requirements.

According to official statistics from the commission, around four enterprises had already over the new capital margin before the announcement, and no fewer than 7 of the existing 22 firms had now exceeded the new minimum share capital huddle.

For example, according to the financial report of pension fund operating managers for the 2020 business year published by the National Pension Commission (PenCom), Stanbic IBTC Pension Managers has successfully accumulated a total share holders’ fund of N64.45 billion, up from N50.42 billion in 2019.

The overall assets of Stanbic IBTC Pension Managers throughout the year were N80.72 billion, compared to N64.93 billion in 2019.

Trustfund Pension Plc, on the other hand, has a shareholders’ fund of N12.49 billion, up from N10.78 billion in 2019. In 2018, the total assets under its control were N13.75 billion, up from N12.02 billion in 2019.

ARM Pension Managers Limited has also cleared the benchmark, with a shareholder fund of N9.03 billion, compared to N7.48 billion in 2019. ARM’s total assets were N13.70 billion, up from N11.32 billion the previous year.

The NPF Pension Limited followed suit, with a shareholders’ fund of N8.012 billion, up from N5.48 billion in 2019. Its assets under management totaled N10.493 billion.

The shareholders’ fund of First Guarantee Pension Limited is N7.26 billion, compared to N10.86 billion in 2019. In 2020, total assets were N7.265 billion, compared to N10.86 billion in 2019.

Leadway Pensure Limited was next in line, with a shareholders’ fund of N7.05 billion, up from N6.10 billion in 2019. Its total assets were N8.67 billion for the year under review, up from N7.331 billion in 2019.

Premium Pension Limited is the second company to reach the N5 billion minimum share capital threshold, with a shareholders’ fund of N5.31 billion.

Meanwhile, other PFAs are currently on the verge of meeting up with the regulator’s directive due in about 5 months from now.

The PFAs who are currently racing against time to beat the deadline are Crusader Sterling Pension Limited which has N4.67 billion, followed by Pension Alliance Limited with N4.29 billion, FCMB Pension Limited with N3.48 billion, Fidelity Pension Managers Limited with N3.44 billion, and NLPC Pension Fund Administrators Limited with N3.23 billion, according to the regulator’s report.

Others include APT Pension Fund Managers Limited, with N2.68 billion, AIICO Pension Fund Managers Limited, with N1.76 billion, and OAK Pension Limited, with N1.73 billion.

Also, Tangerine Pension Limited has N1.70 billion, Veritas Glanvill Pension Limited has N1.53 billion, IEI Anchor Pension Managers Limited has N1.37 billion, Investment One Pension Managers Limited has N1.26 billion while Radix Pension Managers Limited has N985.68 million.

According to PenCom, the increase in PFA share capital from N1 billion to N5 billion was intended to strengthen its capability in terms of operational efficiency and service performance. Six months before the deadline, the operational enterprises that have yet to meet or come close to the necessary capital have become tenser.

Observers in the industry have been expressing their views on the recapitalization deadline set for April 2022 for the PFA.

At a recent post recapitalization summit, the Chief Executive Officer of PenOp, Mr. Oguche Agudah, said as at present, about 50 percent of the operators have made it.

Industry analysts have also expressed their concern, saying 50 percent of the operators making it less than six months to the expiration of the deadline is not a pass mark as this would lead to serious chaos in the industry if the regulator insists on ringing its wind up bell for the firms in April next year.

As the deadline approaches, it is believed that PFAs will employ a variety of options to meet up with the recapitalization fund such as private placements, mergers/acquisitions, right issues among others.

All fingers are crossed for now as we approach the deadline period.


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