In a fast-evolving financial landscape, FCMB Asset Management (FCMB AM), a member of the FCMB Group, is positioning itself as a major catalyst for innovation in Nigeria’s investment space. From pioneering Nigeria’s first private credit fund targeting mid-sized businesses to advocating for structured products that meet the specific needs of institutional investors, the firm is pursuing a bold strategy to deepen market participation, drive positive real returns, and bridge critical funding gaps in the economy. In this exclusive interview, James Ilori, CEO, FCMB Asset Management speaks about the firm’s evolving role, opportunities and challenges in the industry, and what it will take to deliver real value to investors over the next decade. Hope Moses-Ashike brings the excerpt.
How would you describe FCMB Asset Management’s position in Nigeria’s asset management space, and what is your market share?
We see ourselves as partners. We partner with investors to help them achieve their investment objectives. Typically, those objectives fall into four categories: capital preservation, regular/stable income-generation, capital growth, or meeting specific expense needs. For instance, if an investor has N1 million and wants to generate N100,000 this year, they need a return of 10 percent.
So, we begin by understanding the investor’s goals. That allows us to recommend the right product. If the goal is capital preservation, we suggest our Money Market Fund. If it’s capital appreciation, we might recommend our Legacy Equity Fund, which offers potential growth through well-selected equities.
On the flip side, we’re also partners to borrowers, whether in the public or private sector. Governments have fiscal deficits and issue instruments like treasury bills and bonds, to finance these deficits. Companies issue commercial papers or corporate bonds to fund capital needs. We mobilise investor funds and channel them into these areas, matching investors with suitable borrowers.
We guide investors in diversifying their portfolios beyond just Nigerian issuers. For example, if you allocate 20 percent of your portfolio to foreign currency, we might recommend putting 10 percent in Eurobonds. The remaining 10 percent could be invested in stocks like HSBC in the UK, or Microsoft in the US, depending on your risk appetite. This way, you’re no longer solely exposed to Nigeria, benefiting from global markets. If the British Pound appreciates against the Naira, you also gain. Similarly, with US investments, you benefit from the performance of companies like Microsoft.
We consider the global portfolio, not just individual investments. We always stress the need for portfolio diversification because no one can predict the future with certainty. Even the most thorough forecasts can turn out wrong, so diversifying across strategies helps minimise risks. If one strategy underperforms, others may compensate. We guide clients to diversify across currencies, asset classes, and markets to ensure proper risk management.
We have a long-term rating of A- and short-term rating of A2 from Global Credit Ratings Company Ltd (GCR) and an Investment Manager rating of A- (IM) from Agusto & Co and are ranked as a top 5 asset manager in Nigeria in terms of our portfolio size. It is difficult to determine our industry market-share, as there are different sources of information on this, each with different percentages.
You mentioned that FCMB Asset Management (FCMB AM)’s private credit fund, the FCMB-TLG Private Debt Fund, is the first of its kind in Nigeria. Why now? And why are you the first to do this?
My response is always that it all comes down to wanting to help investors achieve their investment objectives. Others in the industry likely saw the same opportunity, but they considered it too risky to pursue. In our case, we got to a point where we thought, we can’t keep talking about the problem without actively looking for a solution. So, we made the decision to take the bull by the horns.
And as I mentioned earlier, it took us two years to secure regulatory approval. That was partly because we also had to work very closely with the Securities and Exchange Commission (SEC), given the pioneering nature of the Fund. The SEC had never approved a private credit fund. There was simply no precedent. It was a completely new concept locally for the Commission, so we had to go through a process of engagement and education. But we stuck with it because, for us, the goal wasn’t just about generating income.
It was about contributing to economic development in Nigeria. It was also about helping PFAs overcome the challenge of consistently generating positive real returns. So, we committed to the process, and today, we’re proud to say it was worth it. The Fund was successfully launched, and it stands as a pioneering effort in Nigeria’s financial space.
The Nigerian asset management industry continues to evolve. What major trends do you foresee shaping the sector over the next five to ten years, particularly with respect to technology adoption, regulatory reforms, and financial inclusion?
Technology is a major enabler. It allows us to access new markets and reach more investors, whether retail or institutional. It also improves operational efficiency, and that’s critical in asset management. With technology, a potential investor simply needs to access a digital platform or app, they can review the product, invest, and monitor their investments, all remotely. That’s why technology will be fundamental to the industry’s evolution.
We’re currently undergoing a digital transformation internally, and once that process is complete, a significant portion of our operations will be automated. That will enhance our ability to serve not just investors in Nigeria but also Nigerians in the diaspora. They’ll be able to engage with our products more easily and efficiently than they do today. In terms of financial inclusion, technology will be pivotal.
The Central Bank of Nigeria released a report last year showing that only 38 percent of Nigerian adults are financially literate. That’s a significant challenge. But one way to tackle it is through digital education. Technology allows us to reach wider audiences with educational content, whether through webinars, social media platforms, or mobile apps. Once people become more financially literate, they begin to engage more with investment products.
You’ve spoken at length about regulatory evolution. How would you assess the current regulatory landscape for asset management in Nigeria? Are overlapping regulations or uncertainty a concern for firms like yours?
The current regulatory environment is, in many ways, adequate. Regulation will continue to play a central role in shaping the industry, and while that brings some challenges, it also offers clarity and investor protection, which we welcome. We’ve already seen the regulators introduce new frameworks around mutual funds, digital assets, and private credit.
These are good developments. But yes, we need to continue engaging with regulators to ensure that as rules evolve, they are practical and allow the industry to innovate without being unduly constrained. At the same time, asset managers must also take responsibility by maintaining transparency, educating investors, and upholding high standards of governance. Ultimately, if we get the balance right between regulation and innovation, the Nigerian asset management industry has immense potential to grow, not just locally, but across the continent and globally.
Looking ahead, what do you see as the biggest challenges and most promising opportunities in Nigeria’s investment environment over the next decade, and how is FCMB Asset Management positioning itself to lead?
One of the biggest challenges is human capital. It’s a serious issue. Today, you train people and, within a few years, they’re leaving the country. It’s a cycle, train, lose talent, and start again. That makes it hard to build a pipeline of future leaders. It also creates talent scarcity, which misprices human capital. Another challenge is infrastructure. Then there’s product innovation.
There simply aren’t enough unconventional, well-structured products that help investors meet their goals, especially PFAs seeking positive real returns. Many investors are overly focused on short-term returns. That’s why Ponzi schemes often thrive, they promise high returns without proper structure. So, the lack of innovative and realistic investment products is a challenge. Regulation can also be a double-edged sword.
While it’s necessary for stability, excessive regulation may stifle innovation. Hopefully, as financial literacy improves, we’ll find a better balance. On the opportunity side, as I said earlier, PFAs are underinvested in Alternatives. That’s a big opportunity and one we’re tackling head-on with the FCMB-TLG Private Debt Fund.
There’s also the opportunity to collaborate with the government on infrastructure development. Finally, the diaspora presents a major opportunity. Technology can help reach them, but it’s not enough. So, besides tech platforms, asset managers need to expand their physical footprint to tap into that wealth.
When do you plan to become number one?
Our goal isn’t just to be number one in Nigeria; we want to break into the top 10 in Africa. If we achieve that, we’re essentially the leader in Nigeria. That’s our focus.
That’s a bold vision! Lastly, as CEO of FCMB Asset Management, what legacy do you hope to leave, particularly in terms of impact?
I aim to make a lasting impact in financial inclusion. One of my key goals is to increase financial literacy and inclusion in the country, ensuring that more people are empowered to manage their finances and participate in the broader economy.
Through our investment products, we can play a pivotal role in fostering financial education and awareness among investors. Another aspect of impact I’m passionate about is driving economic development. The products we create must not only generate returns but also have a positive impact on the generality of the population. This includes contributing to sectors like education, healthcare, and renewable energy.
Additionally, we aim to attract Development Finance Institutions (DFIs) interested in ethical, impact-driven investments. Our private credit Fund focuses on opportunities related to the United Nations Sustainable Development Goals (SDGs), which align with the priorities of many DFIs.
If we want to create African champions in asset management, nurturing talent is crucial. By the time I hand over the baton, I hope we’ll have developed a team capable of taking the company to the next level, with a goal of being among the top 10 asset managers in Africa. Ultimately, for me, it’s not just about being number one in Nigeria.
Nigeria is a big player in Africa, and our goal is to make an impact across the continent. I’m deeply passionate about achieving this, and I believe that by preparing future leaders, we will make this vision a reality.
