Heineken buys additional shares of Nigerian Breweries as FDIs to Africa projected to decline

NIGERIA – Heineken, the majority shareholder in Nigerian Breweries has further increased its shareholding in the company by purchasing an additional 233,110 share units at an average price of N39.94, totalling to N9.3 million.

The purchase comes weeks after the parent company 274, 542 shares at an average price of N35.67.

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This purchase and previous purchases further cement Heineken Brouwerijen B.V’s status as a major shareholder; accumulating a total of 7,720,236 since 30th June, reports Naira Metrics.

Heineken’s ownership percentage of Nigeria Breweries is now put at 37.85%.

As of June 30th, when Nigerian Breweries released its Half-year financial results and reviewed its shareholding pattern, the company had exactly 7,996,902,051 outstanding shares, with Heineken being the majority shareholder with 3,019,363,804 units, which amount to 37.76% of the total shares of the company outstanding.

Heineken’s ownership percentage of Nigeria Breweries is now put at 37.85%.

In like manners, the purchase of the shares of Nigerian Breweries by Heineken and other majority shareholder has mopped up stray volumes on the bourse, and pushed the stock price higher by 29%.

The share purchase has been undertaken by the brewing giant despite its subsidiary experiencing challenges in growth due to low patronage of alcohol in Nigeria due to the COVID-19 pandemic.

Foreign direct investments to Africa to decline

Foreign direct investment (FDI) to Africa is set to exacerbate significantly in 2020 amid the dual shock of the coronavirus pandemic and low prices of commodities, especially oil.

FDI flows to the continent are forecast to contract between 25% and 40% based on gross domestic product (GDP) growth projections as well as a range of investment specific factors, according to UNCTAD’s World Investment Report 2020.

“Although all industries are set to be affected, several services industries including aviation, hospitality, tourism and leisure are hit hard, a trend likely to persist for some time in the future,” said UNCTAD’s director of investment and enterprise, James Zhan.

Manufacturing industries intensive in global value chains are also strongly affected, a sign of concern for efforts to promote economic diversification and industrialization in Africa.

According to the report there is an overall strong downward trend in the first quarter of 2020 for announced greenfield investment projects, although the value of projects (-58%) has dropped more severely than their number (-23%).

Similarly, as of April 2020, the number of cross-border merger and acquisition (M&A) projects targeting Africa had declined 72% from the monthly average of 2019.

But some companies like the Nigerian Breweries, Unilever Nigeria Plc and Nestle Nigeria seem to defy the odds getting cash injections through equity sale to parent countries.

Some investors see this period as the opportune time to pick a good bargain following plummeting share prices.

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