Morgan ​‌‍​​​⁠‍⁠⁠‌⁠‌‍​‌​⁠​‌​Capital Urges Nigerians on Diversified Investments Beyond Real Estate

Morgan Capital Investment Ltd. has urged Nigerians to diversify beyond real estate, noting that the Dangote Petroleum Refinery Initial Public Offering (IPO) presents a timely opportunity to increase participation in the capital market.
Managing Director, Morgan Capital Investment Ltd., Mr Chukwudi Nga, made the call in an interview on Tuesday in Lagos.
Nga said Nigerians’ strong preference for land and houses was understandable, given the tangible nature of property, which could be occupied, rented out and passed on to future generations.
He, however, cautioned against concentrating wealth in a single asset class, stressing that real estate and equities could play different roles within a diversified investment portfolio.
He said equities also offered advantages such as diversification, potential dividend income and participation in business growth without the direct maintenance responsibilities associated with physical property.
“We should stop presenting investment as a choice between property or shares.
“A properly diversified investor can own both. Real estate can provide long-term physical-asset exposure, while equities can provide liquidity, diversification, dividend income and participation in the growth of successful businesses,” he said.
Nga said equities offered the advantage of divisibility, enabling investors to build portfolios gradually with relatively small amounts rather than waiting until they could afford a property.
He said investors could also spread their exposure across sectors such as banking, telecommunications, industrial goods, consumer goods and energy.
“For many investors, a sensible long-term portfolio may contain equities, fixed-income securities, real estate and cash/liquidity instruments rather than relying entirely on one asset class.
“Instead of putting N50 million into one building in one location, you can spread financial investments across different sectors.
“Equities facilitate gradual accumulation. An investor can add to an equity portfolio monthly or quarterly as income becomes available,” he said.
Nga said the Dangote petroleum refinery and petrochemicals IPO was particularly significant because it provided Nigerians with an opportunity to participate in a large-scale industrial asset through the capital market.
The IPO comprises 4.1 billion ordinary shares at N525 per share, with a minimum subscription of 10 shares, or N5,250, and is to close on Oct. 13.
He said the relatively low minimum subscription could help challenge the perception that participation in major capital-market transactions was only for wealthy Nigerians and institutional investors.
According to him, Nigerians can use opportunities such as the IPO to begin building diversified portfolios rather than waiting until they had enough money to acquire property.
“Someone does not have to wait until he or she has N1 million. Starting with N5,000, N10,000 or N20,000 and building consistently can be more valuable than waiting indefinitely for a large lump sum,” he said.
Nga, however, cautioned prospective investors against subscribing to the Dangote IPO solely because of the Dangote brand or the performance of other companies within the group.
He said investors should assess the refinery on its own fundamentals, including its scale, market opportunity, operational integration, export potential, financial position, valuation and associated risks.
“Dangote Cement and Dangote Petroleum Refinery are different businesses, operating in different industries and facing different risks.
“Past performance of one Dangote company cannot guarantee future returns from another,” he said.
Nga said the refinery’s scale, its potential to serve Nigeria’s large domestic petroleum-products market and access export markets made it an important asset for investors to study.
He advised prospective investors to examine the approved IPO prospectus carefully, particularly the financial information, valuation, indebtedness, operating assumptions, supply arrangements, foreign-exchange exposure, regulatory environment and risk factors.
“An IPO should never be approached on the assumption that the price must rise immediately after listing.
“Investors must look beyond the name and excitement surrounding the offer,” he said.
Nga said the broader challenge for the capital market was to build sufficient trust, financial literacy and accessibility to attract more Nigerians who traditionally preferred physical assets.
He said past experiences, including losses suffered by some investors during previous market downturns, had contributed to cautious attitudes toward equities.
According to him, the capital market must continue to strengthen investor protection, ensure transparent corporate reporting, enforce rules against market abuse and simplify the investment process.
“The answer is therefore not simply to tell Nigerians that stocks can produce higher returns. The market must continue to earn trust.
“Operators should play by the rules in line with the ethics of the profession and professional standards,” he said.
Nga added that technology would also be critical to expanding participation, particularly among young Nigerians.
He said financial education should also explain basic investment concepts in simple language, including shares, dividends, diversification, compound returns and the difference between investing and gambling.
Nga noted that many Nigerians wrongly regarded the stock market as gambling or believed that one had to be wealthy before investing.
He explained that buying shares represented ownership in a real business, while speculative trading without adequate information could expose investors to significant losses.
He also cautioned investors against assuming that a low-priced stock was automatically cheap or that a high-priced stock was necessarily expensive.
“Investors need to consider earnings, cash flow, assets, debt, growth prospects, number of shares outstanding and other fundamentals.
“We should explain basic concepts such as: What is a share? What is a dividend? Why does a share price rise or fall? What is diversification? What is compound return? What is the difference between investing and gambling?” he said.
He urged Nigerians interested in the Dangote IPO and other securities to use regulated investment channels, study relevant offer documents and understand the risks before committing funds.