M&As this year’ll largely depend on outcome of presidential election—Chidoka
Beyond the apparent shocks and apprehensions trailing the strange postponement of the 2019 presidential election on the nation’s capital and financial markets, the Managing Director/Chief Executive Officer of Kairos Capital Limited, Mr. Sam Chidoka, has expressed reservations on chances of strong mergers and acquisitions’ (M&As) this year.
Giving his outlook for 2019 in an interview, he said “Projections for the market in an election are dependent first, on outcome of the presidential election.”
He said” “I think a lot is riding on the elections. And where we are today, the elections are too close to call. So, the trajectory of the economy, especially the sector we play in, which is the financial industry, will be dependent on the outcome of the elections and the outlook of the government.
“We have seen one government in power for over three years; we can guess what they are going to do and there are people trying to take over. When any of them wins, the trajectory will change.
Continuing, he said “All in all, we think that it will be an interesting year for the country. “Already, the first quarter of the year has been sacrificed for elections. We hope that the economy will pick up in 2019, but after Q1. Do not expect anything in Q1. We think that from the second quarter, we will begin to see increased activities in the market.
“Hopefully, the election is not so far drawn in terms of litigations, and we hope there will be no crisis and that it goes the way of 2015. If that happens, post-election activities will come in very quickly and we expect that the crowding out effect in the debt capital market that we have seen, where the Federal Government is issuing one-year securities at 14 per cent to 15 per cent, that crowds out corporate investors because if they want to issue, they have to issue at a premium to what the Federal Government is issuing.
Chidoka made it clear that “We are hopeful that once the elections are over, yields will begin to taper off once again. We are also hopeful that the trajectory of inflation coming down will continue and that the prime lending rate will come down. This will make us find more corporates in the market.
Explaining more on the 2019 budget estimates, Kairos Capital boss argued that “It is clear to us that the Federal Government cannot fund this budget alone,” hinting that “They will need to sell some assets. That is why we see some traction in the advisory space in terms of diversion from the Federal Government and we are looking to tap into that space”.
In his views, “The Federal Government will have to continue to raise money because the deficit is huge and could worsen if the price of oil continues to go down the more”.
