VFD Group Plc is planning to set up a special exchange platform to address the need for increased financing for the entertainment and media industry.
The Managing Director of Splitar Holdings Limited, Mr Folagbade Adeyemi, stated this while speaking at the Capital Market Correspondents Association of Nigeria quarterly Forum, sponsored by VFD Group Plc on Tuesday.
Adeyemi, who used to lead Ecosystem Integration at VFD Group, noted that the group was actively pursuing an exchange platform that would cater to the creative and entertainment sector, offering diverse investment opportunities for both domestic and international investors.
At a closing-gong ceremony to mark the end of 2023, actor, Richard Mofe-Damijo noted the importance of a relationship between the business community and the creative sector to stimulate interactions as both sides had tremendous value to offer each other and drive the growth of the Nigerian economy.
Adeyemi disclosed that SplitXchange, currently in the development stage by the group, would offer a platform for financing the media and entertainment industry, among other alternative assets.
Speaking on the theme ‘Beyond Tradition: Increasing Relevance of Alternative Assets in Capital Market,’ he lamented the absence of robust funding pillars for the creative industry in the country.
The VFD Group boss noted that funding for the Nigerian entertainment sector primarily originates from outside the shores of the country.
Adeyemi said, “In today’s market, the quick conversion of assets into cash is a challenge due to the absence of a well-structured marketplace that oversees and regulates these assets. The automation of processes such as compliance, escrow account management, dividend distribution, corporate action management, and drag-along actions technology presents a significant challenge in today’s alternative market.
“The high initial cost of assets in this market restricts participation to only affluent individuals and corporate investors.”
He revealed that the sector remained excluded from the organised financial sector due to the inability of intermediaries to recognise intellectual property as suitable collateral to access funding.
“Projects are financed informally through a network of angel investors, high net worth individuals, non-governmental organisations, the government and personal savings. Investors and asset creators face challenges when seeking investment opportunities or raising capital through traditional financial avenues.
“Traditional financial institutions are ill-equipped to appraise the industry opportunities due to poor visibility, data and income/revenue leakages leading to mispricing through high-interest rates, market illiquidity of associated securities, poor market depth, and lack of accessibility for retail investors,” he asserted.
Speaking earlier on the calls to increase financing for the creative industry, the Chief Executive Officer of Parthian Partners, Oluseye Olusoga, had told The PUNCH, “Anything worth doing well takes time. I think the market will get there eventually but people need to have a better understanding of how to price it, the risks and then over time, a better understanding of the sector and financing. We need to find out how to measure the risks, what is viable and what is not.”
