Major financial institutions are poised to secure N1.26 trillion in capital from the capital market.
This strategic move aims to fulfill the recapitalization
requirements established by the Central Bank of Nigeria (CBN).
Zenith Bank is set to conclude the pre-offer formalities for
a N188.4 billion rights issuance today.
FCMB Group will engage in a public interaction session
tomorrow to discuss its N113.98 billion public offering with potential
investors.
The two offerings are anticipated to open for public
subscription in the upcoming days.
This development will increase the number of banks
participating in the capital market to five, bringing the initial target to
N1.26 trillion.
Shareholders of Fidelity Bank Plc recently increased the
scope of the bank’s capital raise from its initial target of N127.1 billion to
N205.45 billion.
Access Holdings is raising N351 billion from existing
shareholders, while Guaranty Trust Holding Company (GTCO) is seeking N400.5
billion from the public.
Zenith Bank and its professional advisors will sign off the
offer documents today for a rights issue of 5.23 billion shares at N36 per
share. These shares are pre-allotted to existing shareholders based on one new
ordinary share for every six existing ordinary shares held as of the close of
business on July 24.
FCMB Group has initiated a public offer of 15.197 billion
ordinary shares at N7.50 per share.
Meanwhile, Fidelity Bank shareholders have given the green
light for the bank to issue an extra 8.2 billion ordinary shares to accommodate
potential oversubscription to its ongoing combined rights and public offer.
Anticipating oversubscription, Fidelity Bank has secured
approval from shareholders to increase the rights issue and public offer by 3.2
billion ordinary shares and 5.0 billion shares respectively.
Fidelity Bank has initiated a N127.1 billion hybrid offer,
which includes a rights issue of 3.2 billion ordinary shares of 50 kobo each at
N9.25 per share and a public offer of 10 billion ordinary shares of 50 kobo
each at N9.75 per share.
There are signs that Fidelity Bank's offers, set to close
today, may be extended as the bank aims to maximize the positive investor
sentiment that has followed its capital raising. Access Holdings is offering
approximately 17.773 billion ordinary shares of 50 kobo each to existing
shareholders at N19.75 per share.
The rights were pre-allotted based on one new share for
every two ordinary shares held as of June 7. The offer is set to close on
August 14. GTCO is offering 9.0 billion ordinary shares of 50 kobo each at
N44.50 per share. The offer is expected to close on August 12.
As part of the ongoing recapitalization, the CBN is using a
specific definition of minimum capital as an addition of share capital and
share premium, rather than the entirety of shareholders' funds used under the
2004 recapitalization.
With a clear definition, almost all banks must secure funds
to maintain their banking license.
There are signs indicating that this initial group could be
the largest concentration of offers in terms of value. Many experts anticipate
that banks will successfully raise enough capital due to their strong
profitability and liquidity in the Nigerian market.
Mr. Olatunde Amolegbe, Managing Director of Arthur Steven
Asset Management, expressed confidence that banks will leverage their solid
fundamentals and broad investor base for a successful recapitalization. He
emphasized that the market has demonstrated its capacity to absorb, suggesting
that well-packaged and well-priced offerings should not encounter obstacles.
Additionally, he suggested that mergers and acquisitions may
occur in the later stages of recapitalization, particularly among smaller
banks. Mr. David Adonri, Managing Director of HighCap Securities, also believes
that banks are well-equipped to secure the necessary capital.
In his opinion, the Nigerian economy is primarily focused on
short-term trading mechanisms. The banking industry facilitates these
structures, enabling consistent profitability regardless of external
circumstances.
“This is why the industry is very profitable and attractive
to investors. The task of raising about N5 trillion to re-capitalise banks is
an easy challenge for them to surmount.
“The capital market has the depth, reach and world-class
infrastructure to make the capital raising by banks successful,” Adonri said.
In the upcoming recapitalization initiative scheduled for
completion on March 31, 2026, the Central Bank of Nigeria (CBN) has revised the
minimum capital requirements for commercial, merchant, and non-interest banks.
The apex bank has increased the new minimum capital for
commercial banks with international affiliations, commonly referred to as mega
banks, to N500 billion; commercial banks with national authorization, N200
billion; and commercial banks with regional licenses, N50 billion.
Merchant banks have a minimum capital requirement of N50
billion, while non-interest banks with national licenses must have at least N20
billion, and non-interest banks with regional licenses are required to have a
minimum capital of N10 billion.