By Jonah Nwokpoku

The Securities and Exchange Commission, SEC, has said that it is reluctant to license more    Private Equity firms due to fraudulent activities of some operators in the sector.

Commissioner, SEC, Ugo Ikemba stated this while speaking as a member of a panel discussing the ‘the impact of Private Equity on the economy: Regulator as a driver’ at the CBO Capital Partners 4th Annual Investors’ conference held recently in Lagos.

According to Ikemba, “Fund management in Nigeria has met with lots of issues in the past. SEC’s docket is full of fraudulent managers who take money from everyone else. Now with Private Equity, it’s the sophisticated type of investors that you are getting your money from but this doesn’t mean that there is less fraud out there. So we have crisis upon crisis of fraud in Nigeria which has brought us to the point where the SEC is essentially scared of giving people Private Equity licence,” he said.

“Lots of people are asking why it takes up to a year to get a licence and why SEC is not approving so that Pension Fund Administrators (PFAs) will give them access to their N27 billion, it is because we are trying to prevent a problem,” he added.

The conference which had the theme: ‘Can Private Equity save Nigeria?’ had operators and regulators alike discussing the place of Private Equity in Nigeria’s economy and whether Private Equity can really help the country grow.

Retail sales market

Speaking on the role of Private Equity on the growth of Nigerian economy, Director Real Estate, Actis, Mr. Chudi Ejeka argued that Private Equity has helped Nigeria grow.

“A perfect example is the retail sector. Nigeria has a huge retail sales market. Currently estimate puts it at about N160 billion annually. But most of them are informal right now. But that is still larger than South Africa’s $65 to $75 billion per annum. So Private Equity has helped to launch a retail revolution taking place in this country, starting for example with Palm Shopping Centre, Ikeja City Mall and several others that are underway and they have very mature impacts on the economy,” he said.

He however noted that “the impact of Private Equity depends on how one looks at the meaning. I think many understand Private Equity to mean investing in stabilised businesses as opposed to Venture Capital where you have to invest in complete start-ups. But Private Equity is broad enough to include Venture Capital and that is one area that actually has not been developed much at all in this country.”

On her part, Director Henshaw Capital Partners, Ms Barbara James said that Private Equity has not really helped Nigeria explore its economic potential fully.

She however observed that, “There is private equity opportunity that can and will help Nigeria grow if we do the things that we need to do.”

If we look at the asset under management of Private Equity, there are no exact figures for that but I think that the rough figure is about $3 billion and if you look at pension contribution to Private Equity, it’s about N8 billion currently and that is under $50 million. And our pension asset is worth about N4.5 trillion and less than five per cent of that is under Private Equity, which is   about $3.2 billion.