Fidelity Bank Plc is looking to shore up equity capital through private investors as the race for bank’s recapitalisation continues into 2025.
This move is evident in the bank’s recently disclosed plans to place 20 billion units of 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, which the bank will seek its shareholders’ approval in February, will by far 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.
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Fidelity Bank also did a rights issue of 3.2 billion ordinary shares of 50 kobo each to existing shareholders at N9.25 per share on the basis of one 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 to raise capital through a shorter and faster medium by selling stocks to a pre-selected number of individuals/institutions rather than to 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. The capitalisation deadline is March 31, 2026.
Bank insiders are buying
Two months ago, Nneka Onyeali-Ikpe, CEO, Fidelity Bank Plc, acquired 15 million units of the bank’s shares in deals worth N239.4 million executed within two days.
Onyeali-Ikpe bought 9 million units of the bank’s shares at N16.10 per share and 6 million units at N15.75 per share.
The transactions done between November 21 and 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).
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. Between December 17 and 19, 2024, he 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.
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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.”
Fidelity Bank said, “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 N500 billion minimum capital requirement for banks with international authorisation.”
Stock price nears 52-week high ahead full -year results
The N17.45 per share which Fidelity Bank opened for trading on Thursday neared its 52-week high of N18 as against its 52-week low of N7.85 per share. The stock closed 2024 at N17.50 after rising by 61.29 percent.
The Fidelity Bank’s condensed unaudited financial statements for the interim period ended September 30, 2024 shows that it grew group’s nine months profit to N224.603 billion from N91.753billion in 9M’23, while its gross earnings in the same period rose to N772.465 billion from N388.794 billion in 9M’23.
In the first half of 2024, Fidelity Bank paid an interim dividend of 85 kobo 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 20 billion 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.”
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Fidelity Bank will also be seeking the approval of shareholders 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 which will take place in February, Fidelity Bank will seek the shareholders’ approval to raise additional capital up to the newly 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, conditions and at such times as may be determined by the board, subject to obtaining the requisite regulatory approvals.
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