Toba Owojaiye reporting
Abuja, Nigeria
In a strategic move to bolster the capital foundation of First Bank of Nigeria Limited, FBN Holdings Plc has announced the launch of a rights issue valued at N149.56 billion.
Truth Live News gathered that the issuance aims to raise funds primarily to support lending to corporate and retail segments, in line with the Central Bank of Nigeria’s (CBN) recapitalization mandate. This mandate, part of ongoing efforts to stabilize the Nigerian banking sector, compels banks to build up capital buffers to meet rising regulatory and operational demands.
The rights issue, which commences on November 4, 2024, and concludes on December 12, 2024, will see the sale of 5,982,548,799 ordinary shares at 50 kobo each, priced at N25.00 per share. It is offered on a 1-for-6 basis, allowing existing shareholders to purchase one new share for every six they currently hold, based on holdings as of October 18, 2024.
The capital raised will primarily fund lending within FBN Holdings’ corporate and retail business segments, with N77.34 billion earmarked for corporate lending and N25.78 billion directed towards retail operations. This allocation reflects the group’s strategy to diversify lending and capture more of Nigeria’s complex economic landscape.
Additional allocations include N29.46 billion for international business expansion and N14.73 billion dedicated to automation and digital banking enhancements. FBN Holdings aims to leverage these funds to modernize its digital platforms, specifically through the FirstMobile and FirstOnline banking services. By advancing these offerings, First Bank seeks to deliver an improved, seamless experience for customers and increase user adoption across diverse demographics.
“The group is positioned to ensure a convenient banking experience for customers through substantial investment in automation and digital technologies,” FBN Holdings said in a statement, underscoring its commitment to providing a cutting-edge electronic banking experience.
Olufemi Otedola, Chairman of FBN Holdings, has encouraged shareholders to support the rights issue, viewing it as a means to empower the bank to achieve its strategic growth objectives and deliver value to stakeholders. “By supporting the rights issue and accepting your rights, the company will be positioned to deliver improved returns,” Otedola affirmed, advocating for shareholder participation to reinforce the bank’s resilience and competitive positioning in the industry.
Group Managing Director, Nnamdi Okonkwo, reiterated the rights issue’s importance in building FBN Holdings’ market capitalisation, expected to reach N1.047 trillion upon completion. “This rights issue allows shareholders to retain their relative holdings in the company while providing the necessary capital buffers to seize business opportunities in our operating economies,” he noted at the signing ceremony.
The announcement comes at a time when FBN Holdings’ stock on the Nigerian Exchange Limited (NGX) trades at N27.00 per share, reflecting strong investor confidence. With Nigeria’s financial landscape evolving under regulatory pressures and economic challenges, FBN Holdings’ recapitalization drive is expected to position the bank for robust growth, enhancing its capacity for business development and value creation.
As FBN Holdings pushes ahead with its capital raise, the rights issue marks a pivotal step in the company’s journey toward sustained growth and sector leadership. By strengthening its capital reserves, FBN Holdings aims not only to meet regulatory standards but also to seize emerging opportunities, returning First Bank to a prominent place in Nigeria’s financial sector. The offer stands as a strategic move to ensure a resilient foundation and heightened competitiveness for the institution, with medium-term gains projected in Total Shareholders’ Return (TSR) and shareholder value.
The N149.56 billion rights issue represents FBN Holdings’ commitment to capital enhancement, operational modernization, and sector expansion. With strong endorsement from its leadership and a clear roadmap for allocation, the rights issue is expected to bolster First Bank’s market position, bringing growth potential amid the challenges of Nigeria’s economic environment.