Nigeria’s Fidelity Bank Plc looks to private investors in its newest aim at shoring up equity capital as the race for banks recapitalisation continues into 2025.
This move is evident in the bank’s recently disclosed plans to place 20 billion units of its shares in the hands of private investors at a yet-to-be-disclosed price.
The private placement of 20 billion units of Fidelity Bank’s shares, for which the bank will seek its shareholders’ approval in February, will surpass its recently concluded Public Offer and Rights Issue (Combined Offer).
In 2024, based on the prior approval of the bank’s shareholders, Fidelity Bank undertook a capital raising exercise by way of a Public Offer of 10 billion ordinary shares of 50 kobo each at N9.75 per share to prospective shareholders.
Fidelity Bank also did a Rights Issue of 3.2 billion ordinary shares of 50kobo each to existing shareholders at N9.25 per share on the basis of 1 new share for every 10 shares held at the close of business on January 5, 2024 (the combined offer).
This planned Private Placement will allow Fidelity Bank raise capital through a shorter and faster medium, by selling stocks to a pre-selected number of individuals/institutions rather than on the open market.
On March 28, 2024, the Central Bank of Nigeria (CBN) published revised minimum capital requirements for commercial, merchant and non-interest banks in Nigeria, including a minimum capital requirement of N500 billion for commercial banks with international authorisation, with a capitalisation deadline of March 31, 2026.
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Bank insiders are buying
Two months ago, Nneka Onyeali-Ikpe, CEO, Fidelity Bank Plc acquired 15million units of the bank’s shares in deals worth N239.4million executed within two days.
Onyeali-Ikpe bought 9 million units of the bank’s shares at N16.10 per share, while she bought 6 million units at N15.75 per share.
The transactions done from November 21 to 22 at an average share price of N15.96 per share were disclosed in the bank’s notice of share dealing by insiders released at the Nigerian Exchange Limited (NGX).
BusinessDay check on the bank’s share deals by insiders further shows that Onyeali-Ikpe bought 10 million units of the bank’s shares at average price of N15.79. This transaction was done from November 26 to 27, 2024. She bought 6 million units at N15.95 per share and 4million units at N15.55 per share.
On December 23, 2024, Abolore Solebo, executive director, Fidelity Bank Plc bought 2.670million units of the bank’s shares at N16.86 per share. He had between December 17 and 19, 2024 purchased 7.257 million units at N15.84 per share.
Stanley Amuchie, another executive director of the bank had on December 6, 2024 bought 25 million units of the bank’s shares at N16.10 per share.
Fidelity Bank had in a remarkable show of resilience surpassed its capital-raising target of N127.1 billion, marking the completion of the first phase of its recapitalisation efforts.
The combined offer, which marked the first phase of the bank’s capital raising “was a resounding success as evidenced by investors’ keen interest. We also received shareholders’ approval to accept surplus monies arising from potential oversubscription subject to the Company’s issued share capital. The post-offer regulatory approval processes are being finalised and expected to be concluded shortly.
“The resolutions proposed for approval at this EGM will enable us leverage on the success of the combined offer to commence the second phase of our plan for achieving the N500billion minimum capital requirement for banks with international authorisation.
Fidelity is excited about the opportunities in the market
“Based on our phased implementation plan, we intend to achieve the new capital requirement within the CBN’s completion timeframe of March 31, 2026. We are excited about the opportunities in our market and pleased with our performance trajectory. The additional capital will enable your Company take advantage of emerging business opportunities while enhancing long-term profitability, competitive advantage and increasing shareholder value,” Fidelity Bank further said in the notice of the extraordinary general meeting.
Stock price nears 52-week high ahead of full-year results
The N17.45 per share, which Fidelity Bank opened for trading on Thursday nears its 52-week high of N18 as against the 52-week low of N7.85 per share. The stock closed year 2024 at N17.50 after rising by 61.29 percent.
The bank’s condensed unaudited financial statements for the interim period ended September 30, 2024 shows Fidelity grew group’s nine months profit to N224.603billion from N91.753billion in 9M’23, while its gross earnings in the same period rose to N772.465billion from N388.794billion in 9M’23.
In the first half of 2024, Fidelity Bank paid interim dividend of 85kobo per share to shareholders. Fidelity Bank became the first Nigerian bank to initiate a capital-raising exercise in response to the CBN’s directive.
This planned private placement of 20billion shares according to a notice of an Extraordinary General Meeting (EGM) of its members holding on February 6, will be “to one or more investors in such tranches and on such pricing, times, terms and conditions as shall be determined by the Board”.
Fidelity Bank will also be seeking the approval of sharesholders for its issued share capital to be increased by the creation of up to 20 billion additional ordinary shares of 50 kobo each ranking pari-passu with the existing ordinary shares.
The Private Placements will be carried out in conformity with applicable laws and subject to procurement of relevant regulatory approvals, according to the notice of the EGM. It further noted that the shares issued will rank pari passu with the bank’s existing issued ordinary shares.
At the meeting holding in February, Fidelity Bank noted that it will seek the shareholders approval to raise additional capital up to the new issued share capital by way of private placement, rights issue, public offer, or any other mode or combination of modes.
This will be in such tranches, series, amounts, pricing or proportions and on such terms and conditions and at such times as may be determined by the Board, subject to obtaining the requisite regulatory approvals.
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