On Wednesday, FBN Holdings experienced a notable rise in its share price on the Nigerian Exchange Limited, coinciding with the initiation of its rights issue. At the end of the trading session, the shares valued at N27.65 reflected a 1.65 percent increase, marking the highest trading value for the bank in the last week. The financial institution plans to offer approximately 5,982,548,799 shares at a price of N25 each to existing shareholders. This move aligns FBN Holdings with other major banking entities like Guaranty Trust Holding Company, Access Holdings, and Zenith Bank, which have also recently pursued capital raises to comply with regulatory capital requirements.
The Group Managing Director of FBN Holdings, Nnamdi Okonkwo, discussed the intentions behind the rights issue during a presentation at the Nigerian Exchange (NGX). He revealed that the capital raise plan had been in motion prior to the Central Bank of Nigeria’s (CBN) announcement of an increase in capital requirements for financial institutions, indicating that FBN Holdings had already conducted extensive calculations regarding the necessary funding. Okonkwo revealed that the bank’s current focus is on raising N150 billion, with plans to seek an additional N350 billion at their upcoming Annual General Meeting (AGM). This approach positions them to exceed the newly mandated N500 billion threshold set by the CBN.
In his remarks, Okonkwo underscored the strategic importance of the rights issue, expressing the firm’s commitment to leveraging a diversified business portfolio to optimize costs and enhance operational efficiency. He indicated that FBN Holdings aims to expand into new geographic markets and explore promising business adjacencies through both physical presence and digital strategies. Additionally, he pointed out that the firm would utilize the NGX Invest platform to broaden its investor engagement, a move that is anticipated to facilitate smoother participation in the capital raise process.
The NGX Invest platform enables a wider reach for FBN Holdings and mirrors trends among other Nigerian banks, with at least six institutions recently employing the platform for public offers and rights issues. Collectively, these efforts have resulted in approximately N1.26 trillion (approximately $770 million) in capital raised within the sector. This comes amid a broader strategy by the NGX to provide a dynamic infrastructure for capital raising and enable efficient transactions across various asset classes, enhancing its role in fostering growth for listed companies.
Jude Chiemeka, the CEO of the NGX, reinforced the organization’s commitment to supporting listed companies in their capital-raising efforts, highlighting that over N5.7 trillion has been facilitated across diverse asset classes year-to-date. The financial services sector has been highlighted as a particularly significant contributor to the market, accounting for a substantial portion of equity transactions since 2019. Chiemeka emphasized the importance of the sector to the broader economy, particularly in job creation, and expressed gratitude for the opportunity to assist in their capital-raising initiatives.
Amid these developments, it is evident that FBN Holdings is strategically positioned to navigate the evolving regulatory landscape while simultaneously enhancing its capital base. The combination of utilizing the NGX Invest platform and proactive planning underlies the institution’s goal to optimize its operational framework and foster growth through innovative financial solutions. As the rights issue progresses, stakeholders remain keenly observant of FBN Holdings’ subsequent moves and the potential impact this will have on both the institution’s market position and the broader financial landscape in Nigeria.
