Here’s how Fidelity Bank wants to spend offer proceeds

Fidelity Bank Plc is currently in the market for its Combined Offer (public offer and rights issue).

The bank’s target is to raise a total of up to N127.1billion by way of a Rights Issue to existing shareholders and a Public Offer (the Combined Offer).

Under the Rights Issue, 3.2 billion ordinary shares of 50 kobo each are offered in the ratio of 1 new ordinary share for every 10 ordinary shares held as of January 5, 2024, at N9.25 per share.

For the Public Offer, 10 billion ordinary shares of 50 kobo each are offered to the general investing public at N9.75 per share.

As part of the capital raising process, Fidelity Bank on Thursday June 20 (same day the offer opened) held a Facts Behind the Offer presentation at the Nigerian Exchange Limited (NGX).

Fidelity Bank told the capital market community and investors that N19.009billion or 20 percent of the offer proceeds will be invested in the bank’s IT infrastructure; N66.53billion or 70 percent of the offer proceed will be invested in business and regional expansion, while its investment in product distribution channels goes as follows: renovation of branches (N6.65billion or 7percent), investment in ATMs (N950.49million or 1 percent), and investment in POSs (N1.90billion or 2 percent of the offer proceeds).

The bank said its investment in products distribution channels will be completed in 36 months after the offer.

Further check shows that Fidelity Bank will allocate N9.029billion or 9.50 percent of the offer proceeds to investment in cyber security capabilities; N7.603billion or 8 percent of the offer proceeds will be allocated to software licences and hardware; while additional investment in network infrastructure will gulp the bank N2.376billion or 2.5percent of the combined offer proceeds.

These investments according to the bank will be completed in 48 months after the offer.

Also, Fidelity Bank will be investing N9.504billion or 10 percent of the offer proceeds on lending to the retail business segment; N14.25billion or 15 percent of the offer proceeds on lending to the SME Segment; N40.39billion or 42.50 percent of the offer proceeds on lending to the corporate and commercial segment; while investment in regional expansion will gulp N2.37billion or 2.50 percent of the offer proceeds. Fidelity has set 48 months to complete the investment on business and regional expansion.

Overall, the bank expects that the capital raised would support its efforts to drive sustained growth and diversification of its earnings base.

The acceptance and application lists for the Rights Issue and Public Offer which opened on Thursday, June 20 will close on Monday July 29, 2024.

The Combined Offer is a part of the bank’s strategy to increase its share capital base in compliance with the revised minimum capital requirements for Nigerian commercial banks introduced by the Central Bank of Nigeria (CBN) on March 28, 2024.

Stanbic IBTC Capital is the Lead Issuing House to the Combined Offer, while the Joint Issuing Houses include Iron Global Markets Limited, Cowry Asset Management Limited, Afrinvest Capital Limited, FSL Securities Limited, Futureview Financial Services Limited, Iroko Capital Market Advisory Limited, Kairos Capital Limited and Planet Capital Limited.