FCMB Group Plc, a prominent player in the Nigerian financial landscape, has embarked on a significant capital-raising initiative to bolster its financial strength and meet the evolving regulatory requirements set by the Central Bank of Nigeria (CBN). The shareholders of FCMB Group, during a virtual extraordinary general meeting, overwhelmingly endorsed the Group’s plan to raise a substantial N340 billion in additional capital. This ambitious undertaking aims to fortify the capital base of its core banking subsidiary, First City Monument Bank Limited, and position the Group for sustained growth and enhanced competitiveness in the dynamic Nigerian banking sector. This move underscores the Group’s commitment to maintaining a robust financial foundation and adhering to regulatory stipulations, further solidifying its position as a leading financial institution in the country.
The capital-raising program represents a strategic response to the CBN’s revised capital requirements for banks, designed to enhance the stability and resilience of the Nigerian financial system. The initial phase of this program, completed in September 2024, witnessed the Group successfully raising N150 billion. The recently approved expansion of the program to N340 billion provides FCMB Group with greater flexibility and a wider range of funding options. The Group intends to explore a diversified mix of financial instruments, including both ordinary and preference shares, convertible and non-convertible securities, bonds, and traditional loan facilities, to achieve its capital-raising objective. This multifaceted approach allows the Group to tap into various investor segments and optimize its capital structure while minimizing potential risks associated with over-reliance on any single funding source.
In addition to the authorized capital increase, the shareholders also approved several strategic measures to further strengthen the Group’s financial position and streamline its operations. These measures include the potential divestment of stakes in one or more subsidiaries, with the proceeds earmarked for reinvestment in the core banking subsidiary, First City Monument Bank Limited. This strategic reallocation of capital aims to bolster the bank’s capital adequacy and enhance its ability to capitalize on growth opportunities within the Nigerian banking sector. Furthermore, the shareholders endorsed the acceptance of surplus funds generated from the oversubscribed public offer launched in July 2024, pending regulatory approvals. This reinforces the investor confidence in FCMB Group and its growth prospects.
To facilitate the capital-raising efforts, the meeting approved an increase in the company’s issued share capital from N19.8 billion to N39.6 billion in ordinary shares, each valued at 50 kobo. This expansion of the issued share capital provides the necessary foundation for issuing new shares and accommodating potential equity investments. Moreover, the shareholders authorized the raising of up to $15 million (or its Naira equivalent) through a mandatory convertible loan, specifically targeted at select qualified investors. This targeted approach allows the Group to attract strategic investors who can contribute not only capital but also valuable expertise and industry insights.
FCMB Group’s proactive approach to capital management has yielded positive results, as evidenced by its strong financial performance in the first nine months of 2024. The Group reported a remarkable 67% growth in profit before tax (PBT) to N91.8 billion, showcasing its robust operational efficiency and strategic execution. This significant increase in PBT demonstrates the Group’s ability to generate strong earnings despite the challenging economic environment. The PBT growth was distributed across the Group’s diverse operating divisions, with the Nigerian Banking operations contributing a substantial 68% of the total PBT, while the remaining 32% stemmed from other operating companies. This diversified income stream highlights the Group’s well-balanced business portfolio and reduces its reliance on any single operating segment.
The substantial capital-raising initiative, combined with the strategic divestment plans and strong financial performance, positions FCMB Group for continued success and growth in the Nigerian financial services sector. The Group’s proactive approach to strengthening its capital base and adapting to regulatory requirements demonstrates its commitment to long-term sustainability and its ability to navigate the complex dynamics of the Nigerian economy. The strong endorsement by shareholders further underscores their confidence in FCMB Group’s strategic direction and its ability to deliver value to its investors. The combination of strategic capital management, diversified operations, and robust financial performance lays a solid foundation for FCMB Group to capitalize on emerging opportunities and solidify its position as a leading player in the Nigerian financial landscape.
