As NASD PLC prepares for its 11th Annual General Meeting (AGM), critical stakeholders, including VFD Group PLC, are raising concerns about the company’s financial performance and governance structure.
The proprietary investment firm has taken a hard look at NASD’s past performance, expressing the need for a strategic overhaul to ensure the company adapts to evolving market demands and ultimately delivers shareholder value.
VFD Group, a proprietary investment company, is known for investing in businesses with strong potential for growth and value creation.
VFD Group’s Role in NASD
Its involvement with NASD has primarily been driven by the opportunity to align with other investors and drive profitability for both shareholders and the wider economy.
Despite not being one of NASD’s founding shareholders, VFD Group has positioned itself as a key player, with a clear focus on returns.
In its statement, VFD outlined its goals for NASD, pointing out that the company has the potential to meet the investment needs of a younger, more tech-savvy generation. This generation has increasingly embraced alternative investment options and diversified assets, indicating that NASD has a unique opportunity to capitalize on this market segment.
However, VFD also noted that adapting to current economic realities and shifting investor demands would require NASD to rethink its business model.
Financial Performance Woes
The most pressing issue for NASD, according to VFD Group, is the company’s continued poor financial performance.
- In its eleven years of operation, NASD has reported losses in eight of those years, with consecutive losses of N79 million and N69 million in 2022 and 2023, respectively.
- These losses, coupled with a decline in revenue, have painted a concerning picture for the company’s future.
- Revenue fell from N660 million five years ago to N557 million in 2023. A significant portion of NASD’s revenue in 2023—N295 million—came from trading fees and commissions, primarily driven by two companies: CSCS Plc and VFD Group Plc.
- With VFD exiting the NASD Board to join the Nigerian Exchange (NGX) Main Board, the company now faces a heightened concentration risk, making its revenue base even more vulnerable to fluctuations.
The departure of VFD Group from the NASD Board has only deepened the challenge, as it leaves NASD dependent on fewer sources of revenue. This development puts the spotlight on the company’s ability to diversify its income streams in an increasingly competitive market.
A Call for Strategic Overhaul
VFD Group has not minced words when addressing NASD’s current strategy.
The investment firm is calling for a “strategic refresh,” arguing that the existing business model has failed to deliver the expected results. VFD believes that NASD must pivot towards a more dynamic, future-oriented strategy that addresses gaps left by other financial institutions such as the FMDQ and NGX.
The investment company suggests that NASD could carve out a niche by focusing on serving younger investors and developing innovative financial products that cater to this group’s investment preferences.
By doing so, NASD could improve its financial performance and expand its influence in the market.
In addition to strategy, VFD Group has raised concerns about NASD’s governance. Specifically, the firm pointed to procedural inconsistencies in the nomination process for the re-election of directors.
VFD noted that newer directors were being put forward for re-election while longer-serving directors remained on the Board without facing re-election.
This, according to VFD, is not in line with Securities & Exchange Commission (SEC) guidelines and could set a poor precedent if not addressed.
Support for AGM Resolutions
Despite these concerns, VFD Group has pledged its support for all resolutions set to be proposed at NASD’s 11th AGM.
The firm reiterated its commitment to working alongside NASD’s Board and management to improve shareholder value.
VFD’s continued backing of the company reflects its vested interest in driving long-term profitability for NASD, although it has made it clear that a shift in strategy is needed to achieve this.
According to VFD, its investment philosophy centres on “governance as a strategy.” This approach is designed to signal to the market—especially retail investors—that VFD is committed to protecting minority interests while pushing for value creation in the companies it invests in.
The firm’s support for NASD’s AGM resolutions should be seen in this context, with an eye toward future improvements in performance and governance.
Outlook for NASD’s Future
Looking ahead, the question for NASD remains whether it can rise to the challenges outlined by its shareholders and adapt to an increasingly competitive and complex financial landscape.
With the likes of the FMDQ and NGX growing their market dominance, NASD must find its own unique selling proposition to stay relevant.
The 11th AGM will undoubtedly be a pivotal moment for the company. Shareholders will expect to see
