Rights Issue: FBN Holdings to Invest N103.1bn in Corporate, Retail Business Segments
CHIGOZIE AMADI
The management of FBN Holdings has budgeted an estimated N103.1 billion for its corporate business and retail business lending segments of the market, following its plan to raise N150 billion from its existing shareholders.
The Holdings recently held the signing ceremony to commence the rights issue offering of 5,982,548,799 ordinary shares of 50 kobo each at N25.00 per share to its existing shareholder on the basis of one new ordinary share for every six ordinary shares held as of October 18, 2024.
This is an estimated N150 billion FBN Holdings seeks to raise from its existing shareholders by way of rights issue.
Extracts from the offer raising prospectus of the financial institution revealed that lending to the corporate business segment gets N77.34 billion, while lending to retail business segment gets a budget of N25.78 billion.
This covers 68.95 per cent of the N150 billion proposed rights issue the management seeks to raise from existing shareholders.
Out of the N150 billion, a total of N29.46 billion was budgeted to support international business expansion and N14.73 billion for investment in automation and digital banking.
On investment in automation and digital banking, the financial institution said: “The group is positioned to continuously ensure seamless and convenient banking experience for its customers through significant investment in automation and digital technologies via its flagship mobile banking app, FirstMobile, and its internet banking platform, FirstOnline.
“Through FirstMobile, and the new Lit App, First Bank has effectively acquired a broad cross-section of the target demography, with a clear proposition of owning bank accounts and utilising various financial services from the comfort of their locations.
“In line with First Bank’s commitment to providing customers with the best-in-class electronic banking experience, the bank plans to upgrade the FirstMobile and FirstOnline with additional services and features while driving customer adoption of the platforms.”
The offer, however, is part of the company’s plan to recapitalise its commercial banking subsidiary, First Bank of Nigeria Limited, with a view to increasing the bank’s capacity for business development and growth.
The Chairman, FBN Holdings, Mr. Olufemi Otedola in a statement from the document urged shareholders that: “By supporting the Rights issue through accepting your rights, the company will be well positioned to achieve its strategic objectives and to deliver improved returns to all stakeholders, going forward.”
He added: “I, therefore enjoin you to carefully consider this investment opportunity and take up your rights, in full, as the company continues to harness imminent opportunities and deliverer on its promises.”
He further encouraged shareholders to support the aspirations of the company by taking up rights thereby strengthening the company and in particular the bank for growth and improved performance
According to him, this will deliver significantly enhanced Total Shareholders’ Return (TSR) in the medium term and return the bank to its rightful place in the league of financial institutions.
While speaking, at the signing ceremony, the Group Managing Director, FBN Holdings, Mr. Nnamdi Okonkwo said that the rights issue gives the shareholders the opportunity to retain the relative holding in the company while providing the required capital buffers to maximise business opportunities in the economies where we operate.
The rights issue with a opening date of November 4, 2024 (today) and closing date of December 12, 2024 is expected to boost the Holdings market capitalisation to N1.047 trillion on completion of the exercise.
The stock price of FBN Holdings on Nigerian Exchange Limited (NGX) closed November 1, 2024 at N27.00 per share.
In the first 10 months of 2024, the stock price of FBN Holdings has gained 11 per cent from N23.5per share it opened for trading this year to close at N26.15 per share as of October 31, 2024.
FBN Holdings in 2024 financial year has delivered impressive performance amid challenges.
The Holdings announced its unaudited nine months ended September 2024 result and accounts with about N610.86 billion profit before tax, representing an increase of 128 per cent from N267.88billion declared in corresponding nine months of 2023.
From the profit & loss figures, the Holdings declared N526.3 billion profit after tax, about 125per cent increase from N234.05 billion reported in nine months of 2023, to underline the growing fundamentals of the financial institution.
In the first quarter ended March 2024 unaudited result and accounts, FBN Holdings declared N238.53 billion profit before tax, up by 325.2 per cent from N56.1 billion reported in the first quarter ended March 31, 2023.
In addition, the Group in its half year ended June 30, 2024 announced N411.99 billion profit before tax, which was about 101 per cent increase from the N205.05 billion declared in corresponding half year ended June 30, 2023.
Key drivers of profit generation in nine months of 2024 include significant growth in gross earnings , interest income, and the management of operating expenses amid rising inflation rate in Nigeria and other African countries where it has branches.
FBN Holdings declared gross earnings of N2.25 trillion in nine months of 2024, up by 134 per cent from N962.4 billion reported in nine months of 2023.
Its statement of financial position showed a total assets of N27.5 trillion as of September 2024, up by 62.3 per cent from N16.9 trillion reported in 2023 full financial year.
