Access Holdings Plc, the parent company of Nigeria’s largest bank by asset, Access Bank, recently concluded a highly successful rights issue, solidifying its capital base and reinforcing its prominent position within the Nigerian banking sector. The rights issue, which offered 17.77 billion ordinary shares at N19.75 per share, aimed to bolster the company’s financial strength. Despite a minor setback involving the disqualification of certain shares, the offering was significantly oversubscribed, demonstrating strong investor confidence in the company’s future prospects.
The rights issue, based on the allocation of one new ordinary share for every two existing shares held as of June 7, 2024, opened on July 8, 2024, and closed on August 23, 2024. It attracted a substantial level of participation, with 24,181 applications received for a total of 18.82 billion shares, valued at N371.77 billion. While a small portion of these applications faced disqualification, the overwhelming majority were deemed valid and accepted. Specifically, 41.65 million shares, linked to five applicants and amounting to N822.60 million, were disqualified by the Central Bank of Nigeria (CBN) based on findings from the Capital Verification Report. This left a total of 18.76 billion shares, valued at N370.41 billion, being successfully allotted, representing 100% of the shares initially offered.
The success of the rights issue is underscored by its oversubscription rate of 5.76%, indicating strong investor demand. This oversubscription further highlights the market’s positive perception of Access Holdings’ growth strategy and its potential for future returns. The allotment details provide a granular view of investor participation. A significant number of existing shareholders, 21,141, fully exercised their rights, acquiring 5.59 billion shares worth N110.45 billion. Furthermore, a substantial number, 10,889 shareholders, sought additional shares beyond their initial allocation, applying for an extra 10.63 billion shares. This enthusiastic uptake reflects a strong belief in the company’s future performance.
The rights issue also facilitated share trading, with 635 subscribers acquiring 2.14 billion shares through traded rights on the Nigerian Exchange, amounting to N42.26 billion. This activity provided additional liquidity and allowed investors who might not have been existing shareholders to participate in the offering. A portion of existing shareholders, 2,324, opted to partially accept their provisional allotments, acquiring 395.65 million shares worth N7.81 billion. In addition to the shares disqualified by the CBN for reasons stated in the Capital Verification Report, a further 68.43 million shares worth N1.35 billion were invalidated due to non-compliance with the offer terms. This meticulous process ensured the integrity and compliance of the entire rights issuance process.
The strong performance of the rights issue comes on the heels of impressive financial results for Access Holdings. The company reported robust growth in its gross earnings for the first nine months of 2024, reaching N3.4 trillion, a significant increase from N1.6 trillion in the same period of 2023. This substantial 114.5% year-on-year growth was primarily driven by a surge in interest income. This positive financial performance likely contributed to the strong investor confidence exhibited during the rights issue. The increased capital secured through the rights issue will further enhance Access Holdings’ financial stability and support its strategic initiatives.
The successful completion of the rights issue marks a pivotal moment for Access Holdings. The substantial injection of capital will strengthen the company’s balance sheet, providing a solid foundation for future growth and expansion. This enhanced financial position allows Access Holdings to pursue strategic investments, further develop its product and service offerings, and maintain its competitive edge in the dynamic Nigerian banking landscape. The oversubscription of the rights issue and the impressive financial performance underline the market’s positive outlook on Access Holdings’ future prospects and its continued leadership in the sector.
