Fidelity Bank’s Strategic Capital Enhancement: A Comprehensive Overview
Fidelity Bank Plc, a leading financial institution in Nigeria, has embarked on a strategic initiative to bolster its capital base and position itself for sustained growth and enhanced operational efficiency. This comprehensive plan involves a multi-pronged approach, including increasing the authorized share capital, conducting a combined public offer and rights issue, and exploring various avenues for raising additional capital. These strategic moves are aimed at solidifying the bank’s financial strength, enabling it to capitalize on emerging opportunities in the dynamic financial landscape, and deliver increased value to its shareholders.
The first step in this transformative journey is the proposed increase in the bank’s issued share capital from N26.7 billion to N36.7 billion. This substantial increase will be achieved through the creation of 20 billion additional ordinary shares, each valued at 50 kobo. This move will bring the total issued share capital to an impressive 73.4 billion ordinary shares, significantly expanding the bank’s equity base. The board of directors has been granted the authority to cancel any unallotted shares or further increase the share capital if deemed necessary to support future equity-raising transactions, providing the bank with the flexibility to adapt to evolving market conditions and capitalize on strategic opportunities.
In 2024, Fidelity Bank successfully executed a capital-raising exercise through a combined public offer and rights issue. The public offer comprised 10 billion ordinary shares at N9.75 per share, while the rights issue involved 3.2 billion ordinary shares offered to existing shareholders at N9.25 per share, on a basis of one new share for every ten existing shares. This successful capital raise demonstrated strong investor confidence in Fidelity Bank’s growth prospects and reinforced its position as a leading player in the Nigerian financial sector.
Building on this momentum, Fidelity Bank is seeking shareholder approval to raise additional capital through a combination of strategic options, including private placements, rights issues, public offers, or a blend of these approaches. This proactive approach empowers the bank to access diverse funding sources and optimize its capital structure to support its growth trajectory. The board of directors has been entrusted with the responsibility of determining the specific tranches, pricing, and terms of these capital-raising activities, subject to obtaining the necessary regulatory approvals. This strategic flexibility allows the bank to tailor its capital-raising efforts to prevailing market conditions and maximize the benefits for its shareholders.
A key element of Fidelity Bank’s capital enhancement strategy is the proposed private placement of up to 30% of its existing issued share capital, equivalent to 20 billion ordinary shares. These shares, upon issuance, will rank pari passu with the bank’s existing ordinary shares and will be listed on the Nigerian Exchange Limited, subject to regulatory approvals. The private placement offers a targeted approach to raising capital from institutional investors and strategic partners, further strengthening the bank’s financial foundation.
To ensure the seamless execution of these strategic initiatives, the board of directors has been authorized to undertake all necessary steps, including executing agreements, engaging professional advisors, securing regulatory approvals from relevant bodies such as the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC), and filing all required documentation. This meticulous approach underscores Fidelity Bank’s commitment to adhering to the highest standards of corporate governance and regulatory compliance.
The driving force behind these strategic moves is Fidelity Bank’s commitment to strengthening its capital base, enhancing operational efficiency, and positioning itself for future growth opportunities in the dynamic financial sector. By proactively enhancing its capital position, Fidelity Bank aims to capitalize on emerging opportunities, innovate its product and service offerings, and deliver sustainable value to its stakeholders.
The success of Fidelity Bank’s recent combined offer, as confirmed by Dr. Nneka Onyeali-Ikpe, the Managing Director/Chief Executive Officer, underscores the market’s confidence in the bank’s strategic direction and growth potential. This successful capital raise not only strengthens the bank’s financial position but also serves as a testament to its strong leadership and commitment to delivering exceptional results. The enhanced capital base will enable Fidelity Bank to continue investing in its technological infrastructure, expand its branch network, and enhance its customer service capabilities, further solidifying its position as a leading financial institution in Nigeria. This strategic journey positions Fidelity Bank for a bright future, marked by sustained growth, enhanced profitability, and increased value creation for its shareholders.
