SEC Approves Coronation’s N2.1bn IPO

Coronation Asset Management Limited, the asset management arm of Coronation Merchant Bank Limited, has received the approval of the Securities and Exchange’s Commission (SEC) to raise up to N2.1 billion from the capital market in a series of initial public offerings (IPOs).

According to a regulatory document, the IPOs are in three different tranches. The firm seeks to raise N400million, N200 million and N1.5 billion in three separate IPOs for new collective investment schemes, otherwise known as mutual funds.

The mutual funds will avail the investing public with competitive investment opportunities and the management firm the opportunity to develop its asset management business.

Under the first IPO, Coronation will open the Initial Public Offering of 400,000,000 Units at a par value of N1.00 each to raise N400million as part of its Fixed Income Fund. The firm said the offer will open to the public for fifteen working days, from Monday, 10 July 2017 until Friday, 28 July 2017.

The asset management firm said it has also received the approval of the Securities and Exchange Commission to open the Initial Public Offering of 1,500,000,000 Units of N1.00 each at par in the Coronation Money Market Fund.

The Offer will also open to the public for the same set of fifteen (15) working days. from Monday, 10 July 2017 Offer to Friday, 28 July 2017 while the third offer also approved by the SEC, will open on the same date and for the same period of time to raise N200 million through an Initial Public Offering of 200,000,000 Units of N1.00 each at par in the Coronation Balanced Fund.

Mutual funds, are joint investment vehicles through which investors can pool funds and invest in chosen basket of securities under a professional management with a view to optimise returns and reduce risks. They are usually categorised by the class of assets that forms the primary focus of its investments. Thus, there are equity funds, money market funds, bond funds, real estate funds, ethical funds and balanced funds, among others.

Each investor becomes a co-owner, otherwise known as unit holder, in a mutual fund. Mutual fund usually has a professional fund manager that oversees the value creation functions of the fund and a trustee that ensures that the underlining agreements setting up the mutual fund are adhered to. Other professional parties include the registrar that keeps custody of the register of members of the funds.

With several retail investors at the receiving end of the stock market recession, mutual funds appear to be increasingly attractive investment vehicles for retail investors’ participation in the stock market.

There are several competitive advantages that drive investors’ desires for mutual funds. These include the availability of the service of a professional investment manager, which provides full-time, expert investment management that several retail investors might not be able to provide.