FG Sukuk records 446% oversubscription

By Peter Egwuatu


As investors’ confidence is gradually returning to the Nigerian capital market despite the lull in economic activities, the United Capital Plc, leading fund manager in Nigeria has recorded another landmark with the launching of the nation’s first designated mutual fund for N1.0 billion Sukuk Fund.

United Capital Asset Management Limited, a member of United Capital unveiled Nigeria’s maiden Sukuk fund with United Capital Sukuk Fund.

The company is raising N1 billion as initial target size of the open-ended mutual fund, which implies that investors can continue to buy into the fund as they desire at any time.

The Sukuk fund offers exciting returns on investment compared with existing comparative returns with average return on investment expected at 6.8 per cent in 2020 and expected to grow to 6.9 per cent in 2021 and 7.3 per cent by 2023.

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Group Chief Executive Officer, United Capital Plc, Mr. Peter Ashade, said the launch of United Capital Sukuk Fund underpinned the innovativeness of the investment group and its commitment to creating additional products for its teeming customers and Nigerians.

“It is a step in the right direction. We will continue to develop products that will meet the diverse flavours of our clients,” Ashade said.

Group Executive Director, United Capital Plc, Mr Sunny Anene, said: “The group will bring to bear on the fund its wealth of experience as the leading fund manager in Nigeria with assets under management of $400 million.”

He assured that the management of the fund will be in line with its guidelines on permissible investments as approved by the Securities and Exchange Commission (SEC).

Regional Director, Northern Region, United Capital, Mahmoud Shuaib, assured subscribers that the Sukuk Fund will not be invested in businesses or instruments disallowed by the Shariah.

Citing data showing ethical funds like Sukuk Funds outperforming other general funds, Shuaib said : “Investors in the Sukuk fund stand dual broad advantages of maintaining their beliefs and earning competitive returns on their investments.”

He noted that the Sukuk fund is opened to all investors who share the investment philosophy and desirous of competitive returns, irrespective of religious affiliations.

He assured that the company has taken adequate measures and assemble credible professional parties to protect the fund in line with its investment objectives, adding that its Shariah Advisory Board will screen investments to ensure they comply with the fund’s guidelines.

Managing Director, United Capital Asset Management Limited, Mrs Odiri Oginni said the open-ended nature of the fund provides seamless opportunity for investors with easy entry and exit.

She said the fund provides investors with several advantages including protection through the professional management, competitive returns, economy of scale that comes from pooling resources and diversification of portfolio among others.

Fund Manager, United Capital, Mr. Kayode Tinuoye, said while the initial target size of the Sukuk fund is N1 billion, the open-ended nature of the fund allows it to scale up to the full extent of the requests of the investing public.

Shariah Adviser, United Capital Sukuk Fund, Attahiru Maccido, said the outlook for Islamic finance in Nigeria is enormous with the Nigeria growing faster than other jurisdictions.

Minimum subscription to the United Capital Sukuk Fund is 10,000 units at N1 per unit with subsequent subscriptions in multiples of 5,000 units at N1 per unit. This implies minimum initial investment of N10,000 and subsequently in additions of N5,000. Minimum holding period for the fund is 180 days while purchases made after the initial public offering (IPO) will be subject to a lock-in period of 30 days.

The fund will invest in Nigeria’s sovereign Sukuks, sub-national Sukuks issued by state governments, Sukuk issued by companies and a bit of other Shariah-compliant contracts.

Nigeria has a growing market for Sukuk issuance. The Federal Government has already issued three Sukuks, all oversubscribed, while Osun State has also issued a sub-national Sukuk. The Federal Government and many other states have also expressed interest in new Sukuk issuances.


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