The official interest rate remains at a record low with another cut still on the cards, but experts say it won’t be enough to reignite the housing market in 2016.
Source: Interest rates on hold won’t boost house prices, experts tip
“And now for some more bombshell news about the FacebookIPO…
Earlier, we reported that the analysts at Facebook’s IPO underwriters had cut their estimates for the company in the middle of the IPO roadshow, a highly unusual and negative event.
What we didn’t know was why.
Now we know.
The analysts cut their estimates because a Facebook executive who knew the business was weak told them to.
Put differently, the company basically pre-announced that its second quarter would fall short of analysts’ estimates. But it only told the underwriter analysts about this.
The information about the estimate cut was then verbally conveyed to sophisticated institutional investors who were considering buying Facebook stock, but not to smaller investors.
The estimate cut appears to have influenced the investment decisions of at least some institutional investors, dampening their appetite for Facebook stock, and crucially, affecting the price at which they were willing to buy Facebook stock.
As I described earlier, at best, this “selective disclosure” of the estimate cut is grossly unfair to investors who bought Facebook stock on the IPO (or at any time since) and didn’t know about it.
At worst, it’s a violation of securities laws.
This latest chapter in the Facebook IPO story began this morning, when Reuters’ Alistair Barr reported that the research analysts at the company’s lead underwriters—Morgan Stanley, Goldman Sachs, and JP Morgan—had cut their earnings estimates for Facebook during the company’s IPO roadshow. This was highly unusual, if not unprecedented (I’ve been in and around the tech IPO business for almost 20 years, and I’ve never heard of it happening.)
Analysts cutting estimates is generally regarded as significant negative news for stocks. This is especially the case when the analysts who cut their estimates are very close to a company—and, therefore, are thought to have particularly good information.
(In the old days, before the implementation of Regulation Fair Disclosure, companies used to manage the market’s expectations by telling trusted analysts to change their estimates. Reg FD banned that practice.)
An investor who wasn’t told about Facebook’s estimate cut.
The fact that some potential Facebook investors were told of the analysts’ estimate cuts and others were not would seem to be a major “selective dissemination” issue.
It is inconceivable that a reasonable investor would consider the sudden reduction of the underwriter analysts’ estimates to be immaterial to an investment decision.
The SEC and FINRA appear to have acknowledged this, and they may now investigate what happened.
More broadly, everyone is still trying to understand what happened with the pricing of the IPO, which was hyped up to be the offering of the century. We now have some more information on that.
Given the PR and legal disaster that the Facebook IPO is rapidly becoming, most official communications channels have gone silent. Facebook declined to comment. Morgan Stanley did not return a call and email seeking comment.
We have spoken to several sources familiar with aspects of the transaction. We do not have complete details yet, but a general picture of what happened is starting to take shape. For now, please regard most of the information below as scuttlebutt, as it has not yet been confirmed.
The story we are hearing is this…
In early May, as Facebook prepared to kick off its IPO roadshow, the research analysts at the company’s lead underwriters developed financial forecasts to facilitate the marketing and pricing of the IPO.
Such estimates are usually developed through close collaboration between the underwriters’ research analysts and company management. These estimates are viewed by sophisticated investors as having been “blessed” by the company: They are perceived as revenue and earnings targets that the company has reviewed and is confident it will hit. Sophisticated investors use these estimates when they are developing “bids” for the stock, as a tool with which to help determine the price they are willing to pay.
Importantly (and absurdly—the SEC needs to change this), these estimates are not published anywhere.
Rather, in conjunction with industry convention, these estimates are conveyed verbally to institutional investors who are considering investing in the IPO.
This is what happened with Facebook.
As the Facebook roadshow began, institutional investors who were considering investing in the stock were verbally given the underwriters’ initial estimates for the company. And, initially, there was a lot of institutional enthusiasm for the stock.
Several days later, however, on May 9th, Facebook filed an amended IPO prospectus with the SEC.
This prospectus contained new disclosure language that had not previously appeared in Facebook’s SEC filings. The language was on page 57 of the prospectus, in a section discussing the company’s recent financial and user trends:
Based upon our experience in the second quarter of 2012 to date, the trend we saw in the first quarter of DAUs increasing more rapidly than the increase in number of ads delivered has continued. We believe this trend is driven in part by increased usage of Facebook on mobile devices where we have only recently begun showing an immaterial number of sponsored stories in News Feed, and in part due to certain pages having fewer ads per page as a result of product decisions.
The appearance of this language unnerved some sophisticated investors and analysts, who took it as a sign that Facebook’s business might have deteriorated. The language was vague, however, and—to this former analyst, at least—it did not convey that Facebook’s second quarter was weaker than expected.
Soon after Facebook amended its prospectus, all three analysts at the company’s lead underwriters—Morgan Stanley, JP Morgan, and Goldman Sachs—cut their estimates for Facebook’s Q2 and the full year.
These estimate cuts were conveyed verbally to sophisticated institutional investors.
And, not surprisingly, these investors viewed the estimate cuts as a startling and negative development.
One important question, of course, is why all three underwriter analysts cut their estimates.
Facebook CFO, David Ebersman.
It seemed inconceivable that all three analysts could have read the language above and concluded independently that Facebook’s Q2 was weak and therefore decided to take the highly unusual step of cutting estimates in the middle of a company’s IPO roadshow.
More likely, it seemed, someone had directed the analysts to cut their estimates—most likely someone with inside knowledge of how Facebook’s Q2 was progressing.
And we have now heard from one source that that is what happened.
One of the underwriter’s analysts has said he was told by a Facebook financial executive to cut his estimates.
According to another source with insight into the Facebook IPO process, until the underwriters’ analysts cut their estimates, demand for Facebook’s stock among sophisticated institutional investors was high. Once these investors heard about the estimate cut, however, they became more cautious about the IPO.
(Again, an estimate cut like this during a roadshow would be hard to interpret as anything but negative. One institutional investor I spoke to said he has looked at more than 1,200 IPOs over the course of his career, and he has never heard of this before.)
The estimate cut, moreover, was followed by three additional pieces of information that were interpreted negatively by some institutional investors:
1) The price range for the deal was increased, which made little sense in light of the estimate cut,
2) The size of the deal was increased, which meant that more stock would be sold, and
3) Many smart institutional Facebook shareholders like Goldman Sachs decided to sell more stock on the deal—the “smart money,” in other words, was cashing out.
Meanwhile, during private roadshow meetings, Facebook executives were reportedly “signalling” to some sophisticated investors that Facebook’s advertising revenue would not grow as rapidly as some potential investors had hoped. Facebook’s advertising business is driven primarily by company-to-company sales efforts, not by the self-serve ads that drive Google’s business. Facebook executives reportedly made clear to sophisticated investors that this would limit the rate at which Facebook’s ad business could grow.
By the second week of the roadshow, after the estimate cut and price increase, some institutional investors became more cautious about the IPO. According to one investor who looked at the deal, institutions “got the willies” and started to talk about paring back their stock orders.
Meanwhile, out in the real world, demand for Facebook stock was hitting a fever pitch. One senior stockbroker at a major brokerage firm reported that he “had never seen such demand” for an IPO.
These individual investors, needless to say, were not likely aware that the research analysts at the company’s lead underwriters had cut their estimates for the company. They were also, presumably, unaware that Facebook’s Q2 was weaker than expected.
At the end of last week, the time came to decide on the IPO price for Facebook’s stock.
This process was handled by Facebook’s lead underwriter, Morgan Stanley, and Facebook executives.
According to one source (unconfirmed–this really is just scuttlebutt), based on the book of orders submitted by both institutional and retail investors, Morgan Stanley found that there were two distinct price levels at which investors were interested in buying stock.
Institutional investors, having digested the news of the underwriter estimate cut, were comfortable buying Facebook stock at $32 a share.
Retail investors, meanwhile, who were presumably unaware of the estimate cut, were comfortable buying Facebook at $40 a share.
Knowing that a big percentage of the IPO stock could be sold to retail investors instead of institutional investors, Facebook and Morgan Stanley decided to price the IPO at $38.
Although the precise allocations could not be learned, a source says that Morgan Stanley allocated a far larger percentage of the Facebook deal to individual investors than is normally the case in an IPO like this.
On Friday, May 18th, Facebook’s stock opened at $42. It spent most of the day above $40, and then sank quickly. With heavy support from Morgan Stanley, the stock closed on Friday at just above the IPO price.
Given the amount of stock that had been sold, Morgan Stanley could not support Facebook’s stock price indefinitely without exposing itself to huge losses. In two trading days this week, as the IPO hype wore off and news of the analyst-estimate cut spread, Facebook’s stock plummeted.
The stock closed today at just over $31 a share, about the price that institutional investors were reportedly comfortable paying for it.
The SEC and FINRA have already said they may look into the Facebook IPO process. The Massachusetts Attorney General has also just announced that has subpoenaed Morgan Stanley over the issue.
So, at some point soon, we will likely get the full story.
In the meantime, it’s hard to conclude anything other than this:
In one of the biggest IPOs in history, in which a huge amount of stock was sold to small investors, privileged Wall Street insiders once again got top-notch information…and individuals got the shaft.”
“Facebook‘s shares fell sharply again overnight, as two top US financial regulators called for a review of the circumstances surrounding its troubled initial public offering last week.
The separate calls for review, by Securities and Exchange Commission Chairman Mary Schapiro and FINRA Chairman Rick Ketchum, added pressure on the company, its underwriters and the Nasdaq, all of which have taken blame for the stock’s harried opening and subsequent sharp decline.
After Friday’s nearly flat close and Monday’s 11 per cent plunge, Facebook shares plunged another 8.9 per cent to close at $US31. At that price the company has shed more than $US18 billion in market capitalisation from its $US38-per-share offering price last week.
On the slide … Facebook co-founder Mark Zuckerberg rings the bell to open the trading in Facebook shares on Friday.
With Facebook shares all but impossible to sell short, investors have sought out almost any related vehicle to bet against the social network. Over the past three trading days, prices plunged on two closed-end funds that owned pre-IPO shares.
Firsthand Technology Value Fund and GSV Capital Corp both dropped more than 25 per cent even though their Facebook holdings make up only a small fraction of assets.
“Until investors can actually short Facebook, they have to keep shorting other things that can give them some sort of proxy for Facebook,” said Thomas Vandeventer, manager of the Tocqueville Opportunity Fund, which owns shares of both the battered closed-end funds.
“There was a quick rush to exit yesterday, and when it broke the deal price it became self-fulfilling that there was going to (be) additional pressure,” said Michael James, a senior trader at regional investment bank Wedbush Morgan in Los Angeles.
Investors were still shaking their heads over the botched opening trading of Facebook when Reuters reported late Monday that the consumer internet analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering.
JPMorgan Chase and Goldman Sachs, which were also underwriters on the deal, each revised its estimates during the road show as well, according to sources familiar with the situation.
“The allegations, if true, are a matter of regulatory concern” to the Financial Industry Regulatory Authority and to the SEC, FINRA’s Ketchum told Reuters.
One mutual fund source said they had never, in a decade of experience, seen an underwriter cut a company’s outlook during the road show prior to an offering.
The SEC’s Schapiro said investors should be confident in investing, but she conceded there were questions to answer.
“I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook,” she told reporters as she exited a Senate Banking Committee hearing.
Still overvalued?
Brokers who over-ordered shares in the expectation that supply would be limited continued to complain they received too much stock to handle and were left in the dark about forecast changes.
One Morgan Stanley Smith Barney adviser said that the fact that institutional investors received information that retail investors did not is “a huge issue for the entire industry.
“Night and day the institutional clients get things that we don’t get. It’s a big issue,” the adviser said, adding there was surprise within the brokerage that Morgan Stanley, as lead underwriter, had not done more to support the share price.
As bad as the declines have been, though, a view persists that the stock remains overvalued.
Monday’s closing price of $US34.03 implied a 24 per cent annual growth rate for Facebook earnings over the next 10 years – a rate that would rank above 90 per cent of the companies in that industry.
Thomson Reuters Starmine, meanwhile, more conservatively estimates a 10.8 per cent annual growth rate — almost exactly the mean for the technology sector – which would value the stock at $US9.59 a share, a 72 per cent discount to its IPO price.
More than one villain
Investors said the challenge for the young company is to prove it can grow at a rate that justifies its lofty valuation and demonstrates its maturity.
“Wall Street is a severe taskmaster and they’re going to want to see quarterly results, then guidance, then subsequently they’re going to want to see that guidance beaten, and then the guidance raised,” David Rolfe, chief investment officer of Wedgewood Partners, said on Monday evening.
Besides the pressure on Facebook, there is also an intense focus on Nasdaq, which has shouldered much of the blame for the trading failures. The exchange has set aside money to compensate customers, but some on Wall Street are warning its ability to snag future big IPOs is at risk.
But Nasdaq shareholders gave the company a pass Tuesday – the exchange operator’s annual meeting only lasted a few minutes and top executives did not get any questions at all on what went wrong with Facebook or what they were doing to correct it.
Barry Ritholtz, a widely followed financial blogger and the chief market strategist at Fusion IQ in New York, took all sides – Facebook, Morgan Stanley and Nasdaq – to task in the sharpest terms on his blog Tuesday.
“Thus, what we see are a series of bad decisions made by Facebook’s executives going back many years. The insiders got greedy, too clever by half, in how they used secondary markets. They picked a bad banker and an awful exchange,” Ritholtz said.”
Reuters
Vice President Namadi Sambo
By Chinedu Eze
“It has been revealed that top government officials at the Federal and state levels, including Ministers, President’s aides, governors, Senate and House committees, Speakers of State Houses of Assembly and others expend over N300 billion annually on aircraft charter.
A confirmed insider told THISDAY on Monday that charter operations in Nigeria is a multibillion Naira business that effectively competes with that of scheduled commercial operation and involves largely foreign registered aircraft with foreign registered crew, although most of the aircraft are owned by Nigerians.
With average of about $6,500.00 (N1, 01400) for one hour charter, the charter operators rake in huge amounts of revenue every month from mainly government officials and some Nigerian businessmen and women.
It was also revealed that although this subsector of air operation in Nigeria generates billions of Naira annually, many of them do not pay the stipulated charges, Value Added Tax (VAT) and corporate tax to the Nigeria Civil Aviation Authority and government.
THISDAY learnt that according to regulations, before an aircraft is allowed to operate commercial charter in Nigeria, it must be under an airline that has Audit Maintenance Organisation Certificate (AMO) and Air Operators Certificate (AOC).
AMO would ensure that the airline has the competence to maintain the aircraft it is flying, while the AOC would ensure that the aircraft is competently managed, but indications show that most of the aircraft that operate as charter in the country were acquired as privately owned and therefore do not pay the necessary charges, VAT and corporate tax to government.
For the aircraft to operate charter services in the country it must be deregistered of its foreign number and then be registered in Nigeria and the cockpit crew must hold valid Nigeria licence, and the aircraft must be under a commercial operator, but many of these aircraft owners do not abide by these conditions.
A source said that if these aircraft are managed by an airline that meets the aforementioned conditions, “the commercial operator ensures that tax, VAT and other charges are paid when they are due. Currently government is losing so much money on VAT, corporate tax and 5 per cent charge to NCAA, which are lost from those privately owned aircraft that are used for commercial charter services.”
But the spokesman of the Nigeria Civil Aviation Authority (NCAA), Sam Adurogboye, told THISDAY on Wednesday that all aircraft operating in Nigeria meet the conditions set out by the regulatory body, adding that “every airline has a licence that specifies its type of operations and are guided accordingly.”
He also said that private operators pay appropriate navigational charges like landing, parking etc. and that owners of private jets are not allowed to run commercial services, adding that doing so would be regarded as an aberration if detected.
“Owner of private jets are required to put their jets under an AOC holder for management, i.e., maintenance, insurance and crew, and accordingly held responsible for any violation in the process of its operations.”
But the source also told THISDAY, “Nigerians will travel overseas, buy aircraft, register it overseas, bring it to Nigeria in the pretext that it is leased and use it to operate commercial services without paying anything to government.”
The source also adds, “Crew members must correspond with the country of registry; however, these aircraft were not financed by any foreign financial institutions, they were bought by Nigerians, so most of them ought to be registered in Nigeria.”
Depending on sitting capacity and aircraft type, an aircraft could be chartered for average of $6,500 for one hour in addition to waiting charge, which includes return flight.”
Source:Thisday Newspaper
Julia Gillard has acknowledged “political pressure” on her government. Picture: Ray Strange Source: The Australian
PARENTS will receive up to $820 for every child they have at school – paid directly into their bank account next month – as part of a federal government overhaul to combat rising education costs.
In another sign the government is preparing a Robin Hood Budget that targets the rich but helps battling families, Julia Gillard will announce the means-tested payment today.
The Sunday Telegraph can reveal the payment will replace the existing education tax refund, which forced parents to keep receipts to prove they had spent thousands of dollars on computers and school uniforms before claiming a rebate for education expenses.
About a million families eligible for the existing scheme — to be axed in Tuesday’s Budget — were not claiming their full entitlements under the current scheme. The Sunday Telegraph previously revealed about 600,000 families were not claiming at all, missing out on $300 million.
The scheme will be replaced by the new SchoolKids Bonus, worth $820 for every teenager at school and $410 for every primary school child, which will be paid to parents from next year in two instalments – at the beginning of the school year and in July.
But in a one-off bonus, the government will pay refunds for the last financial year into parents’ bank accounts in June as a lump sum as it fights to rebuild its stocks from rock bottom approval ratings.
“In just a few weeks, a million families with kids at school will get extra money in their bank accounts to help with school costs,” Ms Gillard said. “In this Budget, we will deliver a surplus, but today’s announcement is about helping families out as well. We want to make sure families get the help they need to make ends meet.”
About a million families, who qualify for Family Tax Benefit A, will be eligible for the payments, only offered to families earning less than $101,000 if they have one primary-school-aged child, rising to $123,000 for families with two teenagers.
These families have previously been promised lump-sum, cash bonuses of $110 per child in carbon tax compensation, with the first payments to commence on May 16.
The new SchoolKids Bonus will be worth $1640 for parents of two teenage children in high school who qualify, with the one-off lump sum to be lodged in bank accounts next month.
Legislation will be rushed into parliament this week to deliver the cash to families within weeks unless the Coalition blocks the move.
The new bonus will increase the cost of the existing scheme by $400 million, taking the total cost to $1.2 billion.
While parents will welcome the cash, the $830 million handout in June will help the Prime Minister deliver a promised Budget surplus in 2013 by bringing forward the spending into the current financial year. The Gillard government has adopted a similar approach to carbon tax compensation, paying lump-sum, cash bonuses in May and June to shift the impact of the carbon tax compensation from the Budget bottom line in 2013.
The move comes as the PM faces a backlash over the carbon tax, with a senior minister saying it was “killing us”.
Further compensation measures are not expected in the Budget but division has erupted in government ranks over the sales pitch of the unpopular tax.
The PM said the new payment would also help struggling retailers.
“This payment will be good for our economy as well because it will help . . . the retail sector,” Ms Gillard said.
“I believe in managing the economy on behalf of working people. That’s why we work to keep the economy strong, making sure Australian families feel the benefit”
Source: The Daily Telegraph Australia
Chairman, Nestle Nigeria, Olusegun Osunkeye
As investors continued to savour the N12.55 dividend per share they received from Nestle Nigeria Plc for the year-ended December 31, 2011, the company has begun 2012 on a positive note.
The company has announced a growth 140 per cent in profit after tax from N2.571 billion to N6.173 billion for the first quarter ended March 31, 2012.
Specifically, Nestle recorded a turnover of N28.674 billion in Q1 of 2012, showing an increase of 41 per cent above the N20.383 billion in the corresponding period of 2011.
Gross profit rose by 42 per cent from N8.419 billion to N11. 997 billion, while profit before tax soared by 113 per cent from N3.455 billion to N7.349 billion.
A statement by the Corporate Communications and Public Affairs Manager of Nestle Nigeria, Dr. Samuel Adenekan, last Friday, quoted the board of directors as describing the Q1 results as exceptional and in line with management expectations.
“The good performance in the period under review was attributed to capital investment in various infrastructural upgrades at Agbara (Ogun State) factory as well as additional sales activities in March,” the directors said.
According to the company, additional ‘stock build’ was required in Q1 one for a smooth transition to a new ultra-modern distribution centre under construction in Agbara.
“The new N5.4 billion warehouse facility is designed to manage the capacity increases following massive infrastructural upgrades at Agbara factory in the last four years for volume increase. Once completed, it is expected that the new distribution complex will see the company growth for the next 10 years,” the directors added.
They added that that these results should not be extrapolated for the rest of the year, assuring stakeholders of continued commitment of Nestlé management to the earnings forecast for 2012 already communicated to the Nigerian Stock Exchange.
Speaking at the company’s annual general meeting recently, its chairman, Chief Olusegun Osunkeye said its impressive results in the recent years and 2011 in particular resulted from Nestlé Continuous Excellence.
“This an initiative in operational efficiency which enables the company to eliminate waste, increase efficiency and effectiveness, and improve quality in all operations. The company was able to maintain the positive momentum towards sustainable, profitable and capital efficient growth because of the mix of short –term performance with long-term thinking. This enabled Nestlé to deliver improved top and bottom-line performance whilst also investing in longer-term growth platforms,” he said.
He added that in pursuit of the company’s nutrition, health and wellness agenda, Nestlé had implemented relevant innovation targeting the needs of low-income consumers most likely to suffer from micronutrient deficiencies.
Source :Thisday
NSE Headquarters
By Ndubuisi Francis 04 May 2012
The Federal Government yesterday said that it would compel telecommunications companies operating in the country to list their shares on the Nigerian Stock Exchange (NSE).
The biggest telecoms operators are MTN, Airtel, Etisalat and Globacom.
Minister of State for Finance, Dr. Yerima Ngama, who spoke at a forum where ministers unveiled their scorecard as part of the 2012 democracy day celebration and first anniversary of President Goodluck Jonathan’s administration, stated that the era where multinational companies would come to Nigeria and generate huge profit without the citizenry benefiting would become a thing of the past with the compulsory listing.
The minister said a lot was being done to revive the capital market, adding: “We know that most of us who invested in the market have lost a lot. Not because these companies are not known yet. In fact, many of the intrinsic values of their shares are higher than their market values but what is happening is that there is a loss of confidence by Nigerians.”
He said 81 per cent of all the trading on the NSE involves foreign investors, stressing that Nigerians were displaying a lukewarm attitude occasioned by what transpired in the capital market.
“We are also trying to encourage new companies to list on the NSE; we want to make sure that MTN, Glo, Zain (Airtel) and all the companies that are doing very well and making billions of profit should also list on the capital market so that Nigerians can also share from their profits,” he said.
The minister also added that the power generation and distribution companies that would be privatised would be compelled to list their shares on the NSE.
“The power sector is also another big business in Nigeria and we are working to ensure that when we are regulating the sector, we want to do it in such a way that one or two people will not come into the sector to form a cartel.
“So to avoid this, we are also going to make sure that distribution companies that will operate in that sector list their shares so that after their privatisation, Nigerians will be given the opportunity to buy shares in these power generation and distribution companies,” he said.
Meanwhile, the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, at the forum yesterday also disclosed that the launch of the Integrated Personnel and Pay System (IPPS) in 2010 had started yielding fruits, citing the N14 billion saved from the payment of pensions to ghost pensioners.
She added that in 2011, the Federal Government investments yielded N48.723 billion in dividends, operating surplus, rent, and privatisation proceeds even as the minister noted that appreciable progress had been made in re-directing credit to key sectors like agriculture, power and aviation at single digit interest rates.
Source : Thisday
Okonjo-Iweala
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said lack of a vibrant housing finance sector is among the bottlenecks militating against home ownership in Nigeria.
The minister, who decried the high cost of housing development in Nigeria, noted that the country lacks an effective housing finance sector to assist potential landlords.
Nigeria’s mortgage penetration rate in comparison with other sub-Sahara African nations is 10 per cent. Its interest rates are close to 20 per cent.
The cost of housing development in Nigeria is also said to be too high, compared to that of other countries.
This limits the number of Nigerians who can decent homes.
Okonjo-Iweala spoke in Abuja at The Mortgage Finance Roundtable of the Lands, Housing and Urban Development.
The minister noted that if majority of Nigerians owned their homes, it would considerably reduce the level of corruption.
She said: “The housing sector also holds huge potentials for job creation and employment, particularly for our youths. The National Bureaus of Statistics (NBS) reports that the real estate market contributed 1.64 per cent to the Gross Domestic Product (GDP) in the first quarter of 2011, while the Building and Construction sub-sector contributed 1.99 per cent to the GDP in the fourth of 2011. Many of the unskilled youths can find useful employment in this sector.
“The ability of people to obtain mortgages will also reduce the incidence of corruption because most people will have honest ways to actualize their dreams of owning their own homes.
“A strong Mortgage Finance System is very crucial to achieve sustainable growth in Nigeria’s housing sector towards ensuring secure and decent housing. However this must come with institutional checks to prevent abuse both by borrowers and exploitations by lenders.
“For the Banks, an adequate mortgage finance systems will require long term lending structures over a period of years to ensure that this system works and that people can access mortgage over a number of years,” she stressed.
Source- The Nation
Peter Dasilva/European Pressphoto AgencyFacebook’s headquarters in Menlo Park, Calif.3:43 p.m. | Updated After shying away from the public markets for years, Facebook is ready for its debut.
On Thursday, Facebook set the estimated price for its initial public offering at $28 to $35 a share, according to a revised prospectus. At the midpoint of the range, the social networking company is on track to raise $10.6 billion, in an debut that could value the company at $86 billion.
The company is finalizing its prospectus, as it prepares for a road show to meet investors in cities like New York, Boston, San Francisco, Chicago, and Baltimore.
On Friday, Facebook executives will meet in New York with the sales forces of the company’s underwriters to brief them on the I.P.O. presentation, according a person with knowledge of the matter. Those salespeople will then reach out to prospective investors to begin shopping the offering. The I.P.O. has attracted a small army of 33 underwriters, led by Morgan Stanley, JPMorgan Chase and Goldman Sachs.
The filing on Thursday is the first time Facebook has officially indicated where its shares will be valued. The company is expected to begin trading on the Nasdaq, under ticker “FB,” in two weeks, following an eight- to nine-day road show, according to people familiar with the matter. Given that time frame, Facebook should begin trading May 17 or May 18, these people added.
The upcoming roadshow will help the company and its bankers gauge investor demand and settle on a final price, which could be above the expected range. Facebook’s underwriters will weigh a multitude of factors, such as demand, market conditions and how much room to leave for a first day pop. While companies like to see a healthy jump on the first day of trading, a huge pop could mean that the offering was priced far too conservatively.
If Facebook reaches for the top end of its range and if its underwriters exercise an option to sell an additional 50.6 million shares, the company will raise$13.6 billion in its offering.
Investors have been eagerly awaiting the Facebook offering, which is on track to be the largest Internet I.P.O. on record, trumping the debut of Google in 2004. They are lured by the prospect of strong growth: in the first quarter, Facebook’s daily active users, a measure of engagement, increased by 41 percent, to 526 million.
Still, Facebook is experiencing the growing pains typical of a technology start-up. While revenue continues to rise, profit sputtered in the first three months of the year, falling 12 percent, to $205 million, as expenses jumped significantly.
A spokeswoman for Facebook declined to comment.
For Facebook’s insiders, the I.P.O. represents an opportunity to take some money off the table and to take care of hefty tax charges. Facebook’s 27-year-old chief Mark Zuckerberg is planning to sell 30.2 million shares, worth $951 million, based on the mid-point of the range. Mr. Zuckerberg, who will retain voting control of 58.8 percent of the company after the I.P.O., plans to use the proceeds from thesale to cover tax obligations.
Other big sellers include Accel, one of the earliest venture backers of the social network, which is selling about 19 percent of its stake, or 38.2 million shares. Russian billionaire Yuri Milner’s DST Global is selling about 20 percent of its holdings, or 26.3 million shares.
And Goldman Sachs, which organized a large financing round for Facebook just last year, is also unloading 20 percent of its stake, or 13.2 million shares.
Source:The New York Times
Naira notes
By Obinna Chima
The naira was stable on both the Central Bank of Nigeria’s (CBN)-regulated Wholesale Dutch Auction System (WDAS) and interbank market Wednesday due to inflow of the greenback into the system.
Similarly, the behaviour exhibited by the local currency yesterday was also attributed to an increase in the supply of the dollar by the CBN at the bi-weekly auction.
In fact, at the first WDAS session for May held yesterday, the naira closed at N155.69 to a dollar, the same amount it was at the end of Monday’s auction.
The CBN offered a total of $150 million to the 15 banks that participated in the auction. This represented an increase by 25 per cent, over the $120 million it had offered to 19 banks on Monday.
On the other hand, the local currency maintained its position at the interbank as it closed at N157.40 to a dollar, the same value it was on Monday.
The market did not open on Tuesday, due to the public holiday that was declared to commemorate the workers’ day.
Dealers said the liquidity position of the market was influenced by the sale of about $194 million to banks by two multinational oil companies. The companies were identified as Mobil and Agip.
Meanwhile, the CBN yesterday disclosed plans to auction treasury bills worth N145.05 billion next week Thursday. The bills would range between 3-month to 1-year maturities at its bi-monthly auction. Specifically, the apex bank said it would issue N32.05 billion in 91-day bills, N53 billion in 182-day bills and N60 billion in 364-day bills.
The CBN issues treasury bills regularly to tame inflationary pressure, to ensure that it reduces the volume of money supply in the economy, amongst others.
The CBN had auctioned treasury bills worth about N141 billion at the previous auction. It had sold 91-day paper, 182-day bills and 364-day bills. Yields at the previous auction fell across various tenors. This was then, driven by strong demand from offshore and local institutional investors.
“We expect the CBN to maintain tight monetary conditions and mop up excess liquidity. This means the CBN will not reduce treasury bills or Open Market Operation (OMO) rates as long as there is no turnaround in the fiscal path,” a source said.
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