Nigerian banks scramble for investor funds as recapitalisation heats up
As the race for Nigerian banks’ recapitalisation heats up, early birds have either started or finalised plans to increase their shares in the hands of the investing public.
In their usual look-good approach to both customers and investors, the NGX-listed banks are scrambling for equity funds through rights issues and public offering.
A rights issue occurs when a company offers its existing shareholders the chance to buy additional shares at a reduced price. A public offer is the sale of equity shares to the public in order to raise capital.
Fidelity Bank Plc has taken the lead in allowing investors to grab their slices in the bank’s share sales as well as an opportunity for existing shareholders to increase their stakes. Other banks are similarly finalising their share sales in the short term.
Banks began the race for equity funds after the Central Bank of Nigeria (CBN) increased their minimum capital requirements ten times.
The CBN has set a timeline of 24 months for banks to comply with the new requirements commencing April 1, 2024, and terminating on March 31, 2026.
The broad objective of the recapitalisation programme is to engender stronger, healthier and more resilient banks to support the government’s $1 trillion economy by the year 2030.
Other banks that are in the race for fresh capital include: Access Holdings, Stanbic IBTC Holdings, and FCMB Group which are meeting with parties to ensure seamless outing on the Nigerian bourse.
Just last Thursday (June 20), Nigeria’s 6th largest bank, Fidelity Bank Plc, opened its public offer and rights issue.
The bank is currently in the market raising a total of up to N127.100 billion by way of a rights issue to existing shareholders and a public offer (the combined offer).
Under the rights issue, 3.2 billion ordinary shares of 50 kobo each are offered in the ratio of 1 new ordinary share for every 10 ordinary shares held as of January 5, 2024, at N9.25 per share.
For the public offer, 10 billion ordinary shares of 50 kobo each are offered to the general investing public at N9.75 per share.
The rights issue and public offer opened on Thursday, June 20, and will close on Monday July 29, 2024.
The shareholders of Guaranty Trust Holding Company Plc (GTCO) Plc at the third Annual General Meeting (AGM) last month approved the company’s plan to establish a capital raising programme of $750 million either through public offerings, private placements, rights issues and/or other transaction modes.
GTCO Plc has already filed a preliminary ‘red herring’ prospectus with the Securities and Exchange Commission (SEC) in connection with a proposed offering for subscription of ordinary shares of 50 kobo each in its share capital (the ordinary shares) to raise gross proceeds of up to N500 billion (the proposed offering).
The proposed offering is anticipated to open by July, 2024. The number of ordinary shares to be offered and the price range for the proposed offering have not yet been determined.
Similarly, the shareholders of Access Holdings Plc at the 2nd Annual General Meeting (AGM) in April unanimously backed the Group’s plan to establish a capital raising programme of up to $1.5 billion as well as the subset initiative to raise up to N365 billion specifically through a rights issue of ordinary shares to its shareholders.
Also, shareholders of FCMB Group Plc at the company’s 11th Annual General Meeting (AGM) in May approved an increase in issued share capital from N9.901 billion to N19.802billion and authorised a N150 billion capital raise to drive future growth plans.
In seeking approval for the N150 billion increase in share capital, FCMB Group made its aspirations to retain the international license clear, with this year’s capital raise being the first step in that process.
Furthermore, Stanbic IBTC Holdings Plc has obtained shareholders’ nod for a N400 billion debt issuance programme as well as additional equity capital of N150billion.
For the debt issuance programme, the shareholders of Stanbic IBTC Holdings Plc authorised the directors to establish a debt issuance programme (the Programme) in an amount of up to N400billion or such foreign currency equivalent thereof.
When shareholders of FBN Holdings Plc met virtually on April 30, the board sought their approval to raise about N300 billion in new capital.
The capital raise by FBN Holdings will be by issuance of shares via a public offering, private placement, rights issue in the Nigerian or international capital markets.
Also, Ecobank Transnational Incorporated (ETI), the parent company of the Ecobank Group, at its 36th Annual General Meeting (AGM) held this month in Lomé, Togo, got shareholders’ authorisation for the board of directors to raise within a period of one year from the date of the meeting up to $600 million (over N840billion).
The ETI capital raise will be through senior-ranked debt, tier 2-qualifying subordinated debt or a combination of these forms of instruments as the board of directors may deem appropriate.
Also, United Bank for Africa (UBA), at its AGM, got shareholders’ approval to raise additional capital through the issuance of securities comprising ordinary shares, preference shares, convertible and/or non-convertible notes, bonds, or any other instruments, in the Nigerian and/or international capital markets.
“The strategy may include a combination of options such as Rights Issue or Private Placement. The fact remains that we are confident in our ability to meet the CBN’s capital adequacy requirements and will keep investors informed as we progress,’’ Oliver Alawuba, UBA’s GMD/CEO, said recently.
The apex bank raised the minimum capital base for banks with international authorisation to N500 billion. The CBN also increased the minimum capital base for commercial banks holding national authorisation to N200 billion, and for those with regional authorisation to N50billion.
Wema Bank just concluded the first tranche of its recapitalisation exercise, having secured all relevant regulatory approvals for the allotment of its N40bn rights issue which was initiated in December 2023.
Wema Bank recently sought shareholders’ approval to raise N200 billion in capital. It also sought shareholders’ approval to increase its issued paid-up share capital from N6.429 billion to N25 billion by creating an additional 37.14 billion ordinary shares, each valued at 50 kobo, which will be on a par with the existing shares.
Zenith Bank, fresh from obtaining shareholders’ approval for its transition to a holding company structure, also got their approval to raise additional capital through a planned issuance of 31.3 billion new shares.
The bank amended its articles of association to reflect the new share capital of N31.3 billion, bringing the total issued shares to 62.7 billion, with each share valued at 50 kobo.
At an AGM scheduled this Monday June 24, Sterling Financial Holdings Company will seek shareholders’ approval to raise N200 billion through a rights issue. The company will sell 40 billion ordinary shares to existing investors at discounted prices if that approval is granted.
