Sterling Bank eyes N12.5bn in rights issue

The directors of Sterling Bank and other professional parties on Monday concluded pre-offer processes for a N12.5 billion rights issue, paving way for the application list for the issue to open next Monday.

Sterling Bank is seeking to raise N12.5 billion through a rights issue of about 5.889 billion ordinary shares of 50 kobo each at N2.12 per share.

At the completion board meeting held in Lagos, the board of directors of Sterling Bank, the issuing house, stockbrokers to the rights issue and other parties signed the rights prospectus and other documents, concluding the pre-offer processes for the supplementary issue.

The completion board meeting was sequel to the approvals of the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE).

The shares have been pre-allotted on the basis of three new ordinary shares of 50 kobo each for every eight ordinary shares of 50 kobo each held as at May 20, 2013. Application list for the rights issue opens on Monday June 24, 2013 and will run till July 31, 2014.

The net proceeds of the rights issue, estimated at N12.13 billion, would be used to finance branch expansion, infrastructure upgrade in support of automated and cashless payment, enhance information technology and additional working capital.

About 35 per cent of the net proceeds, estimated at N4.24 billion, would be used for branch expansion; 15 per cent of the funds estimated at N1.82 billion would be used for infrastructure upgrade, 10 per cent of the funds equivalent to N1.21 billion would be used for information technology and the largest chunk of 40 per cent, estimated at N4.85 billion, to be set aside as additional working capital.

Speaking at the completion board meeting, chairman, Sterling Bank Plc, Suleiman Adegunwa, noted that shareholders and directors had in May 2013 approved the rights issue, following which the board and professional parties obtained regulatory approvals for the registration and listing of the shares being issued under the rights issue.

He said the new equity funds would be used to fund the bank’s growth plan including expansion and modernisation of its branch network and information technology as well as to support the bank’s growing retail and corporate banking businesses.

“The rights issue will provide our bank with the required funds to execute projects that will enhance the bank’s growth and profitability,” Adegunwa said.

Managing director, Sterling Bank, Yemi Adeola, said the rights issue marked the beginning of the bank’s capital raising plan, which is meant to put the bank on stronger footing and further position it to compete effectively and deliver better returns to shareholders.

According to him, the bank plans to raise $80 million through the rights issue and $120 million through private placement to shore up the bank’s tier one capital.

He said the board and management of the bank have over the past seven years optimised the initial modest capital of the bank to build a leading mid-tier bank with strong and stable fundamentals.