Exclusive: VFD’s Nonso Okpala shares the firm’s investing thesis and plans ahead of NGX listing

VFD Group Plc will list its shares on the Nigerian Exchange Limited (NGX) this Friday. The company’s Group Managing Director/CEO, Nonso Okpala, spoke exclusively to TechCabal on the thinking behind the move.

After securing regulatory approval, VFD Group Plc, a Lagos-based investment firm, will officially list its shares on the Nigerian Exchange Limited (NGX). According to notes in its 2022 financial statements, VFD Group Plc first considered an NGX listing over a year ago; at the end of September, the company was delisted from the NASD Over-the-Counter (OTC) Securities Exchange.

Nonso Okpala, the company’s Group Managing Director/CEO, told TechCabal that VFD was always prepared to list on a stock exchange from its creation 14 years ago. The company was started by 35 friends and associates who raised N2.4 million. “When you bring 35 people together, you need a level of governance that costs more than the initial investment. From the get-go, the core of our business is broad-based shareholding and the necessity of using governance. So we have always known we will get listed at a stock exchange,” Okpala said.

VFD’s approach to investing focuses on long-term profitability and fundamentals. “We never play a valuation game, so we are never on to the hottest thing,” said Okpala. “We look at businesses that are focused on serving the needs of their sector. It is more about the sustainability of the businesses. We don’t want them to grow too fast but at their own pace.”

“As an investment company, access to long-term and collaborative partnerships and visibility within the investment community is most important for us. The NGX is the only platform that you can do that in Nigeria,” said Okpala.

In February 2022, VFD acquired a 5.2% stake in the NGX. Other portfolio companies include VBank, VerifyMe, and Piggyvest, where it holds a 12% stake. “Our business model is a long-term relationship with the businesses we invest in. If you put it in relationship terms, it is like a marriage. In the situations where divorces happen—we call them divestment—we make money regardless. We do not look for exits. The money we have invested is a long-term investment to the success of the business,” he added.

A requirement for long-term investing is patient capital. “One key advantage about getting listed is gaining access to more funding and carrying out investment in different sectors, especially those you are precluded from as a non-listed company,” said Okpala.

VFD’s funds under management currently stand at N55.7 billion. While the company declined to provide estimates and projections, it expects that figure to increase in the short to medium term following its listing. According to its half-year 2023 financial statements, VFD posted a profit-after-tax of N3.7 billion. The company announced plans to raise N32.5 billion via equity and debt in July after shareholders ratified the move.

In the last decade, there has been an intentional effort to woo companies to list on the NGX; telco giants MTN and Airtel are currently listed. Despite this, the sense is that the NGX still has some way to go before it becomes the exchange of first choice for mature companies operating in Nigeria.