From a seed capital of N2.5 million about 12 years ago and shares priced at N2.00 per share during the company’s initial capital raise, VFD Group is currently priced at N368 per share in the Nigerian capital market, with a market worth of N32 billion and investments in over 40 companies. In this interview, NONSO OKPALA, Group Managing Director of VFD Group, speaks with OBINNA EMELIKE on the journey so far, the Group’s growing investment portfolio, import of corporate governance, projection for the future, among other related issues.
What is VFD Group all about?
We are an “industry-agnostic” proprietary investment company. This simply means we are a business that continues to seek profitable investment for ourselves and our stakeholders, across different investment options and businesses, regardless of their situated industry.
While we started off with concentration in financial services, our footprint over the last three years has started to reflect more of our long-term objectives. Today, we have investment interest in technology, exchanges (NGX & NASD), payments, real estate, hospitality, digital media, power sector, oil and gas, asset leasing, arts, cinematography, among others. These are alongside our traditional banking, asset management, and investment banking core.
What do you consider as the major achievements of the Group in the last 12 years?
We have built some remarkable businesses in the financial service sector, and they are operating, quite successfully, within the micro finance, currency exchange, asset management, real estate and other sectors.
Along the line, we realized that there is a handshake between the financial services sector and other sectors because the financial services sector is an auxiliary sector. It was no surprise, therefore, that we started thinking of being exposed to other sectors outside of financial services.
About four years ago, we made the strategic decision to redefine our scope of investment from one that was focused on financial services to one that was sector agnostic, a general investment company.
We have done quite well. We have made about forty investments, which are at different levels of maturity, different sizes and in different sectors. The most prominent of them is VBank, a digital banking application. With VBank, you can open an account and have it active in less than three minutes; you get a valid account, you are able to transact, receive and transfer funds. Most importantly, you have some assets and wealth management type products executed on that platform.
We also have a significant stake in Abbey Mortgage Bank. Abbey has been in existence for 29 years. Of course, after such a long period, there would be a need to rejuvenate the business in terms of management and personnel.
We also have investment in a company called Anchoria Asset Management. Anchoria was established via a Greenfield approach. We started it with the family of the late Chief Dada. We obtained an operating license four years ago and have significantly grown assets under management within that period. But the most interesting thing about Anchoria Assets Management is that it has an alternative approach to investment and how investments are executed, which has provided the bases for rapid and sustainable growth in that line of business.
We consider the investment from a product perspective, from our various target customers’ needs and requirements in the market and try to align the product to the part of the market where it would sell.
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We also have a significant investment in a company called HEREL, a hospitality company. What makes HEREL particularly interesting is the fact that we have fused the hospitality business model and the real estate model in such a way that they enhance the yield on the real estate portfolio because we are mixing hospitality with so many lifestyle types as well as real estate.
Typically, real estate will give you 5 percent yield, but with the HEREL model, we project that we will consistently deliver a 20 percent yield. The stability of real estate and an enhanced yield of about 20 percent makes it a compelling and worthwhile investment.
In addition, we have a real estate development company called Dynasty Real Estate. Its focus is more residential development for sale compared to HEREL, which is more of long-term investment in hospitality, leisure, and lifestyle development. Dynasty Real Estate has developed estates and properties that have been sold outrightly within Lagos and Abuja.
One of our most interesting investments is in a technology company called PiggyVest. VFG Group owns about 12 percent of the company. It is one I am quite excited about because it represents the future for us.
It was founded and is currently managed by a group of young, enterprising and very bullish smart guys and we think they would do quite well in redefining how fintech pushes financial services to the next level. We are quite optimistic about the investment.
What has been your motivation for the past 12 years in business?
We are motivated by a need to fulfil our own destiny. First, we were motivated to meet existential needs of potential customers; that was how we started. We wanted to earn a decent living and take care of our families. But more importantly, every single founder of VFD Group believes that we own our destinies, and it is what we make of it that will really translate to reality.
Secondly and most importantly, help people actualize their dreams and that is why personally, investment is more or less the work of God. We are excited to continue to look for great opportunities, for those fantastic teams and support people that can really make a difference in their enterprise and pursuit of entrepreneurship.
How are you able to coordinate all the many investments successfully?
There are fundamental things. The most important one is that in investment, you get a huge footprint by putting money in the right places, and you gain a successful footprint by backing the right people, then you gain an enduring footprint by supporting the right people to build exceptional companies. So, that is what we do to ensure sustenance in all these companies. We find the right management teams and support them to create value for stakeholders.
How are VFD shares doing in the stock market?
It is doing very well. We started the company raising funds at N2 per share 12 years ago, today our share price is about N368. It is great that VFD Group’s value has gone up. We are currently listed on NASD, and it is available for any stockbroker to buy on behalf of his or her clients.
VFD Group is currently championing a corporate governance drive. Can you tell us about this and why it is important?
We believe that corporate governance is not just a requirement but is an enduring strategy for success in the corporate world. What we have achieved over the years is because we created a platform for people to make investments and for them to feel assured that their investments are managed in their best interest. It is important that people can relate with your initiatives and most importantly, they believe that we act in their own interest.
Once you can achieve that, any time you call for funding, capital or try to raise money, be it from the bank or debt market, there is enough governance, integrity, and track records for people to back you up. Once you get that firepower and you have the right team to identify the good opportunities, it then becomes a cyclical process of generating resources, investing adequately, and generating more values.
Which investment stands out from others for the 12 years you have been in business?
It is difficult to say. But for me, the investment that stands out and defines us as an investment company is our investment in PiggyVest. It is a significant investment in fintech. It is a large and futuristic investment because the future of any economy is technology based, particularly fintech. So, that is a big one.
But it also speaks of how we started. We started by setting up companies as opposed to investing in companies. Most of the companies we set up now serve as base for the subsequent investments that we are making. And this investment has been our largest investment and an investment in a non-VFD Group startup.
How did the group stay afloat despite the impact of Covid-19?
We were lucky with respect to how we started. In the first six to seven years of our existence, we had a virtual tradition; approvals and discussions were done via emails, phone calls, chats, and WhatsApp groups because we used GSM as a fundamental business tool.
Of course, we went into digital banking and the core of our operation remained virtual. So, when covid-19 broke out, it was not a major disruption to how we run our business. We took advantage of the fact that many firms still had to re-tool, and it took them up to four or five months to make an effective retool of their business processes. But ours was already set up to run as such and it was not much of a disruption for us.
Even though some of our business interests experienced slower growth between April and July 2020, our year end performance across all entities remained a marked improvement over prior period. This was possible for various reasons. We have built a robust business model with products and services that are easily adaptable despite the changing climes. Also, our agile nature enabled us to make the quick and necessary changes to our work, thereby keeping a motivated workforce committed to delivering quality service across our businesses.
QUOTE: What we have achieved over the years is because we created a platform for people to make investments and for them to feel assured that their investments are managed in their best interest