Zenith Bank plc opted to list a global depositary receipts (GDR) of its shares on the London stock exchange in order to get better access to international investors, capital and improved corporate
governance, BusinessDay learnt at the weekend.
The objectives of the GDR issuance are also to increase the bank’s visibility and trading in its securities, as well as to expand and diversify its investor base.
“Listing on the London Stock Exchange affords foreign investors and funds managers in Global Emerging Markets (GEM) an opportunity to access Zenith Bank shares, particularly those who due to internal policies/procedures are prevented from trading, purchasing, selling shares in markets other than through the London Stock Exchange,” the bank said.
“Also, increased liquidity brings greater ability to use international debt/equity markets for future capital raises, lowering cost of capital, while London corporate governance practices are considered ‘best in class’, giving investors additional comfort on equity story.”
Management also believes that even though Zenith Bank is currently covered by about 17 analysts with six international and 11 local analysts, there is the potential to increase analyst’s coverage with the listing of the GDR.
The enhanced international profile may also provide positive momentum for potential re-rating of Zenith shares, as well as increase liquidity and valuation.
The bank listed $850 million worth of its ordinary shares on the London Stock Exchange as global depository receipts (GDRs) at $6.80 apiece, last Thursday.
One GDR represents 50 ordinary shares, the bank said. JP Morgan is the depository bank, while Citi is the custodian. It listed 125,000,000 units of the receipts which will also be based on the naira exchange rate.
It also has a primary listing in Nigeria with a market capitalisation of more than $4 billion and is the most highly capitalised Nigerian bank, with a nine month 2012 capital-adequacy ratio [CAR] of 29 percent.
The lender reported a 52 percent rise in net income to N64.6 billion in the third quarter through September, the company said in October.
Zenith Bank shares retreated 0.94 percent to N21.00 naira at the close of trading last Friday in Lagos.
The lender’s stock has climbed nine percent this year, compared with the 18 percent advance of the Nigerian Stock Exchange All-Share Index
The LSE is already home to 96 companies whose main operations are in Sub Saharan-Africa, including 23 which have shares listed on its main market.
It joins three other Nigerian lenders with GDRs trading in London — Guaranty Trust Bank, Diamond Bank and First Bank of Nigeria Plc.