- UBA and FBN Holdings Lead the Charge as Stanbic IBTC, Others Follow
- Strategic Moves by Majority Shareholders to Retain Control Highlighted
As Nigerian banks scramble to meet the new capital base requirements set by the Central Bank of Nigeria (CBN), rights issues have emerged as the preferred method for raising funds in the capital market. Leading this drive are major players like FBN Holdings, United Bank for Africa (UBA), and Stanbic IBTC, each offering significant equity sales to their existing shareholders.
FBN Holdings Launches N150bn Rights Issue
FBN Holdings has initiated a rights issue worth N150 billion, offering 5,982,548,799 ordinary shares at 50 kobo each, priced at N25.00 per share. Shareholders are eligible for one new share for every six shares held as of October 18, 2024. The offer is scheduled to close on December 12, 2024.
UBA Raises N239.39bn
United Bank for Africa (UBA) is also in the market, seeking to raise N239.39 billion through a rights issue. The offering comprises 6,839,884,274 ordinary shares at 50 kobo each, priced at N35.00 per share, on a 1-for-5 basis for shares held as of November 5, 2024.
UBA’s Group Chairman, Tony Elumelu, explained the rationale in a letter to shareholders:
“The primary objective of this rights issue is to further strengthen our capacity to take advantage of growth opportunities and sustain our leadership in the banking industry.”
The proceeds, according to Elumelu, will enhance UBA’s lending capacity, improve digital infrastructure, support sustainable business practices, and expand its operations across Africa.
Stanbic IBTC and Wema Bank in the Spotlight
While Stanbic IBTC is yet to enter the market, it has sought approval from the Nigerian Exchange Limited to list a N148.71 billion rights issue, offering 2,944,772,083 ordinary shares at N50.50 per share. The qualification date for shareholders is October 29, 2024, on a 5-for-22 basis.
Wema Bank, which resolved to raise additional capital through equity or mergers during its Annual General Meeting, has already completed a rights issue earlier in the year, listing 8.572 billion shares at N4.66.
Analysts Weigh In
The trend toward rights issues has sparked discussion among analysts and shareholders. Economy and capital market expert, Rotimi Fakayejo, believes majority shareholders are driving this strategy to retain control.
“Majority shareholders want to maintain their holdings and avoid dilution by external investors. Rights issues allow them to strengthen their position while raising the needed funds.”
Chairman of the Ibadan Shareholders Association, Eric Akinduro, echoed similar sentiments, urging shareholders to take advantage of their rights:
“By taking up their rights, shareholders can increase their investment and benefit when the banks meet their capital requirements. The board’s confidence in existing shareholders is well-placed.”
However, Moses Igbrude, National Coordinator of the Independent Shareholders Association of Nigeria, dismissed claims that banks are deliberately excluding new investors:
“The CBN instructed the banks’ owners to recapitalise, and they have opted to first approach existing shareholders. If necessary, new investors will be invited in subsequent stages.”
Strategic Planning
David Adonri, Vice Chairman of HighCap Securities, noted that each bank’s fundraising approach—whether through rights issues, public offerings, or hybrid options—is tailored to deliver optimal outcomes:
“Banks have calculated their strategies to ensure they meet the CBN’s requirements while protecting shareholder interests.”
As the December 2024 deadline looms for compliance, Nigerian banks are accelerating efforts to secure the necessary capital, ensuring they remain competitive in a rapidly evolving financial landscape.
