Sterling Capital Markets Limited, the manager of the Nigerian Energy Sector Fund (NESF) has announced plans to increase the fund by N3 billion from the capital market.

Speaking at the media re-launch of the NESF and the Frontier Fund, Mr. Emmanuel Ajayi, Head, Financial Advisory Services, Sterling Capital Markets Limited, stated that the decision is part of its strategic goals of becoming an investment vehicle of choice. He said, "As part of our goals for the current year, we plan to mobilise more funds from investors, achieving the critical mass in funds under our management so as to enable us to fully maximise the benefits of pool investing. To this end, we are also targeting an additional N3 billion which is to be raised by the fund through an offer before the middle of the year."

The NESF is a close-ended investment vehicle which mobilises funds from individuals and corporate entities for investment in the energy sector of the economy. A close-ended fund is one with a fixed number of issued units, whose units can not be increased without getting the necessary approval from stakeholders and regulatory authorities, as against an open-ended fund which does not have a fixed amount of issued shares.

The NESF was incorporated on October 19, 1998, and was subsequently quoted on the Nigerian Stock Exchange (NSE). It was listed in the Managed Funds sub-sector of the NSE at N1, 000 per unit. Presently it is been traded at N741.23 per note while the sub-sector is now been called Other Financial Institutions.
According to Ajayi, investing in the fund today, presents investors with enormous advantage, adding value to their portfolio, due to the fact that it is currently selling below the par value of N1,000 and also because the Net Asset (NAV) is higher than the current market price.

He disclosed that the fund has recorded improved financial performance over the years, surpassing industry average and market indices. It recorded a profit after tax of N75.78 million in its 2007 financial year, compared with N13.7 million in 2006, net income per note grew from N18 in 2006 to N95 in 2007, While net coupon which stood at N13.77 per note in the previous year appreciated to N76.19 per note in 2007.
According to Ajayi, "For the March 2007 year-end, N76.19 per note amounts to 10.09 per cent yield which is twice the average dividend yield in the market. Consistently, the NAV of the NESF has continued to grow over time against the background that only 25 per cent of profit is reinvested while 75 per cent is distributable.

He noted that the objectives of the fund is to achieve long term, high level capital appreciation and above average income, to be a reference fund in current income generation for investors and also be a veritable vehicle for investors to save for retirement and other financial goals.

The Frontier Fund, on the other hand, is an open-ended unit trust scheme, pooling resources together from investors to optimise returns accrued to high volume investing. It is a collective investment scheme that enables the holders to acquire investment holdings in a well diversified portfolio. It is listed on the memorandum quotation sector of the Daily Official list of the NSE.