Nigerian conglomerate UAC group has suspended a planned rights issue due to a weak equity market and shareholders had rejected a proposal to issue preference shares via a private placement, Chief Executive Larry Ettah said on Tuesday.
Ettah said the capital raising would happen at subsidiary levels and the UAC group would fund its own subscription from internal cash flow.
Ettah said its property unit, UPDC, will raise 5.6 billion naira ($28.16 million) via a rights issue and 24 billion naira via commercial paper to lower its funding costs. Two other units, Livestock Feeds will sell 1.1 billion naira in shares and Portland Paints will sell 2 billion naira in shares.
“The days of $1 million apartments are behind us,” he told an analysts’ call, referring to its luxury property development.
“We are looking to recalibrate our development towards the retail segment.”
UAC group with interests in food and restaurants, agricultural feed, paints, logistics and real estate, posted a 43.6 percent fall in pretax profit for 2015 at 7.94 billion naira.
Shares in the UAC group ended flat at 19.43 naira while its agricultural unit Livestock Feeds dropped 4.76 percent to 1.0 naira. Both underperformed the broader share index, which was up 0.42 percent on Tuesday.
Ettah said 2015 was a tough operating year for UAC due dollar shortages in the forex market following a currency devaluation, coupled with slower economic growth due to the lower price of crude, Nigeria’s main export commodity.
UAC plans to diversify its group into retail and consumer segments, which Ettah expects to account for 60 percent of its business, up from 15 percent now.
“The economy was growing at 7 percent and now its growing at a lower rates and that affects how our business does. We have tried to maintain volume growth rather than price increases because we recognise the weak condition of the market,” he said.
