Otedola seen reducing stake in FBN Holdings to 3%

Billionaire businessman Femi Otedola is expected to further reduce his stake in FBN Holdings Plc, the holding company for Nigeria’s oldest lender, to three percent.

Otedola’s recent decision to sell some of his shares, according to market sources, resulted from his belief that market regulators were “not cooperating with him on his reform”.

The share price of FBN Holdings had reached a record low recently after Otedola offloaded his 834 million shares held directly and indirectly through Primrose Global Concept, Shetland Global, Wells Properties, and Impetus Synergy, in deals valued at about N9.3 billion.

At N10.1 kobo per share as of Tuesday, FBN Holdings’ shares outstanding of 35,895,292,792 were valued at N378.69 billion. As at June 10, the share price of FBNH stood at N10.55, down from N11.25 on June 6.

Otedola and his nominee, Calvados Global Services Limited, had on October 23, 2021, through APT Securities and Funds Limited, acquired a total of 1,818,551,625 units of shares from FBN Holdings issued share capital of 35,895,292,791, making his equity stake in the financial holding company 5.07 percent.

In December 2021, Otedola acquired 2.5 percent additional interest in the company, bringing his total stake to 7.57 percent (2.717 billion units), a share purchase that formally consolidated his position as the single largest shareholder of FBN Holdings and placed him well ahead of his then closest rival Tunde Hassan-Odukale, chairman of First Bank of Nigeria Limited.

Read also: Femi Otedola’s equity stake in FBNH drops to 5.25%

Otedola and Hassan-Odukale were in contention over who was the single largest shareholder after the news about Otedola’s share acquisitions broke last October. FBN Holdings had on October 26, in line with the Nigerian Exchange Limited’s request, issued an announcement providing an additional update on its substantial shareholders, stating the reason for classifying the shareholdings of Hassan-Odukale and his related parties into two parts of 4.16 percent and 1.20 percent respectively.

“FBNH’s share price remains elevated following last year’s rally in the stock. This rally was inspired by a struggle for control over the group’s board and does not reflect the group’s fundamental value, in our view. As a result, we maintain our sell recommendation on the stock,” Ope Ani, senior analyst at Lagos-based Coronation Research, said in a recent note to investors.

Before his recent share sale, Otedola had between December 6 and 8, 2021 bought additional 200 million shares of FBNH shares at an average price of N11.52.

United Capital analysts, who set a target price of N7.1 per share for FBN Holdings, have asked investors to sell, also noting downside potentials, while their counterparts at Vetiva Research have placed the stock rating under review following its negative returns.

The analysts said: “FBN Holdings released its long-awaited full year 2021 audited results before trading hours on May 25. The group reported pre-tax profit (+99.1 percent year-on-year) and net profits (+70.2 percent y/y) growth during the period.

“Similarly, pre-tax profit (+1,164.9 percent y/y) and net profits (+422.0 percent y/y) for fourth-quarter 2021 standalone also grew significantly. Accordingly, on the full year 2021 earnings per share of N4.17, the board proposed a dividend of N0.35, in line with our expectations. This implies a dividend yield of 3.3 percent on May 25 closing price.”

FBN Holdings has proposed that final dividend of 35 kobo per 50 kobo share amounting to N12.563 billion subject to shareholders approval will be paid to shareholders whose names appear in the register of members as at the close of business on June 13, 2022. This implies that Otedola will on June 21, after the company’s annual general meeting on June 20, receive about N660 million from FBN Holdings as final dividend income.