Recently, Nigerian lender Sycamore expands into asset management with SEC licence. This term "asset management" has triggered many students to begin asking me about what asset management means in Nigeria.
In this article, I'm going to explain everything you need to know about asset management, it licensing with the SEC and requirements to obtain an asset management license in Nigeria.
What is Asset Management
Asset management can be defined as the professional oversight of various financial assets—such as stocks, bonds, and real estate—to achieve specific investment goals for the benefit of clients. For example, the Nigerian lender Sycamore that's diving into asset management secured a fund manager licence to operate as a fund and portfolio manager.
Furthermore, the digital lending company is diversifing portfolios across stocks, bonds, and money-market instruments in local and foreign currencies.
The Fund/Portfolio Manager licence is the operating licence that must be obtained by any companies venturing into asset management business in Nigeria. However, it's important to know that only Securities and Exchange Commission (SEC) can issue this asset management's licence in Nigeria.
“Securing our SEC license is the culmination of years of building institutional-grade compliance systems,” said Sycamore CEO Babatunde Akin-Moses. “We’re not pivoting from lending; this is a strategic expansion that complements our core business.”
Objective of an Asset Manager
The goal is simple. An asset manager makes investment decisions on behalf of their clients or client's businesses, implementing strategies to align with the client's financial goals and risk tolerance. An asset manager goes through the systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner. The primary objective is to grow a client's portfolio over time while mitigating risk.
“We’re addressing a major gap in Nigeria’s investment market,” said Onyinye Okonji, Sycamore’s co-founder and CCO. “Traditional asset management has remained out of reach for many Nigerians. Our goal is to change that.” More so, Akin-Moses added that “we are democratizing access to wealth management solutions that can help more people invest in their desired lifestyle and future financial security.”
Steps to Obtain a Fund/Portfolio Manager License from the SEC
If you or your company is looking to venture into asset management business in Nigeria, here are criteria, requirements and documents you must meet and have respectively to secure operating licence from the Nigeria's SEC.
1. Incorporate your business/company
The only authorized agency that is allowed to incorporate businesses and companies in Nigeria is the Corporate Affairs Commission (CAC). So, you have to begin the process by registering your company with CAC. However, note that your company's Memorandum and Articles of Association should explicitly authorize it to engage in fund or portfolio management activities while filing with CAC.
2. Raise Capital
Capital is an essential element of every companies; it's an inevitable aspect to form a business organization or a company. However, the minimum paid-up capital requirement to form an asset management portfolio is ₦150 million. This capital can be in the form of bank balances, fixed assets, or investments in quoted securities. It worth noting that Sycamore is a digital lender with ₦10 billion assets under management.
3. Fidelity Bond
It is also mandatory to obtain a current fidelity insurance bond covering at least 20% of the minimum paid-up capital, as stipulated by the SEC's rules and regulations.
Application Fees
Prepare to pay the following fees:
- Filing/Application Fee: ₦50,000
- Processing Fee: ₦200,000
- Registration Fee: ₦500,000
- Sponsored Individual Fee: ₦50,000 per individual
Completion of Required Forms
- Form SEC 3: For the company
- Form SEC 2 and 2D: For each sponsored individual and compliance officer (to be completed in duplicates)
- Form SEC 2 and 2D: For each director of the company (to be completed in duplicates)
Sponsored Individuals
- Appoint a minimum of three sponsored individuals, including the Managing Director and a Compliance Officer responsible for monitoring compliance with relevant laws and regulations.
- Each sponsored individual must have at least four years of post-graduation experience in fund/portfolio management.
- Provide detailed curricula vitae, copies of credentials (including secondary school and NYSC discharge certificates), police clearance reports, and means of identification (e.g., international passport, tax, or utility payment documents).
Company Documentation
- Submit a company profile detailing its history, organizational and shareholding structure, principal officers, and past and current activities.
- Provide the names and addresses of subsidiaries or associated companies, including the type of business and percentage holding.
- Present evidence of payment for shares allotted to shareholders.
- Include an operational manual or organizational chart, a business plan, and bank statements for the last six months.
Corporate Documents
- Provide copies of the Certificate of Incorporation, Memorandum and Articles of Association (including the power to perform the specified function), and CAC forms showing the statement of share capital, return of allotment, and particulars of directors, all duly certified by the CAC.
- Submit the latest audited accounts or an audited statement of affairs of the company, ensuring a cash assets ratio of 60% liquid assets and 40% fixed and other assets.
- Provide a sworn undertaking to maintain proper records and render returns as specified by the SEC, signed by a director or the company secretary (to be notarized).
- Submit a sworn undertaking to abide by SEC rules and regulations and the Investments and Securities Act No.29 of 2007, signed by a director or the company secretary (to be notarized).
Submission and Inspection
- An application is considered filed only when all documents and information have been completed.
- The SEC will conduct an inspection of the applicant company during the processing of the application.
- A thorough knowledge of the SEC's rules and regulations and the Investments & Securities Act No. 29 of 2007 is essential for registration.
Conclusion
Securing a Fund/Portfolio Manager license from the SEC in Nigeria is a meticulous process that requires strict adherence to regulatory requirements. By following the outlined steps and ensuring compliance with all stipulated guidelines, your company can successfully obtain the necessary license to operate within Nigeria's asset management industry.
