First HoldCo’s Strategic Divestment and Capital Strengthening Initiatives
First HoldCo Plc, a prominent player in the Nigerian financial landscape, is embarking on a strategic divestment of a 25% stake, currently held by RC Investment Management Ltd., a special purpose vehicle. This move follows a recent transfer of the shares from Barbican Capital Ltd. to RC Investment Management in July 2024. The transaction, valued at N323.33 billion, involved a block deal of approximately 10.43 billion ordinary shares traded at an average price of N31 per share. First HoldCo’s Managing Director, Wale Oyedeji, affirmed the company’s intention to dispose of these shares in the market, although a specific timeline has yet to be disclosed. The divestment is expected to clarify the ownership structure of First HoldCo, addressing concerns raised by regulators and investors regarding governance and transparency.
The shares held by RC Investment Management represent a significant portion of First HoldCo’s ownership structure, and their divestment will likely have implications for the company’s future direction. While the identity of the ultimate beneficiary of RC Investment Management remains a subject of scrutiny, First HoldCo has characterized the entity as a temporary holder of the shares. This strategic move aligns with First HoldCo’s broader efforts to strengthen its capital base and streamline its operations.
First HoldCo’s capital strengthening initiatives are driven by the Central Bank of Nigeria’s revised minimum capital requirements for financial institutions. The company aims to raise N350 billion in fresh capital through private placements within the current quarter, following a successful N147 billion rights issue completed earlier this year. These efforts reflect First HoldCo’s commitment to maintaining a robust financial position and meeting regulatory obligations. The capital raise will provide the bank with additional resources to support its growth and expansion plans, while also enhancing its ability to manage risks and navigate economic uncertainties.
In addition to the capital raise, First HoldCo’s shareholders recently approved a dividend payout of 40 kobo per 50 kobo ordinary share, amounting to a total distribution of N14.36 billion for the 2023 financial year. This dividend distribution represents a return to shareholders and underscores First HoldCo’s commitment to delivering value to its investors. The company’s financial performance in the 2023 financial year enabled it to distribute dividends while simultaneously pursuing capital strengthening measures.
The recent share transfer and subsequent divestment plans have also coincided with significant changes in First HoldCo’s ownership structure. The exit of Oba Otudeko, a major shareholder and former chairman of FirstBank (a subsidiary of First HoldCo), followed the July block transaction. The transaction also involved firms linked to another former chairman, Tunde Hassan-Odukale. These developments highlight the ongoing evolution of First HoldCo’s ownership landscape and the potential for further shifts in the balance of power within the company.
The impact of the July block transaction was evident in the Nigerian Exchange’s trading activity. Data from CardinalStone Securities revealed a substantial surge in both trading volume and value on the day of the transaction. The total volume traded increased by an impressive 807.03% to 11.67 billion units, while the total value traded skyrocketed by 1,028.44% to N363.41 billion. First HoldCo’s share price also responded positively to the deal, reaching a 52-week high of N36.45. The transaction’s scale significantly impacted market dynamics, highlighting the substantial interest and liquidity surrounding First HoldCo’s shares.
First HoldCo’s strategic divestment, coupled with its ongoing capital strengthening initiatives and dividend distribution, reflects the company’s proactive approach to navigating the evolving regulatory landscape and maximizing shareholder value. The successful completion of these initiatives will play a crucial role in shaping First HoldCo’s future trajectory and solidifying its position within the Nigerian financial sector. The company’s efforts to enhance transparency and address governance concerns will be closely monitored by investors and regulators alike.
