FBN Holdings Plc Launches N150 Billion Rights Issue: A Strategic Move for Recapitalization

FBN Holdings Plc Launches N150 Billion Rights Issue: A Strategic Move for Recapitalization

FBN Holdings Plc has officially launched its Rights Issue, offering 5.983 billion ordinary shares at a price of N25 each, with the goal of raising N150 billion for existing shareholders. This initiative is structured so that shareholders can acquire one new share for every six shares they hold as of October 18, providing a unique opportunity to enhance their investment in the company.

Chairman Mr. Femi Otedola stated that this recapitalization effort is primarily focused on strengthening the commercial banking arm, First Bank of Nigeria Ltd. He emphasized that the capital infusion will not only enhance the bank’s capacity for growth and expansion in both wholesale and retail markets but will also facilitate advancements in automation and digital banking services. Moreover, the funds will support First Bank’s ambitious agenda to expand its footprint across Africa.

Otedola encouraged shareholders to take advantage of this rights issue, noting that their participation is crucial for the group’s strength and long-term growth. “Your involvement will position First Bank for sustained growth and improved performance,” he affirmed.

Group Managing Director Mr. Nnamdi Okonkwo echoed this sentiment, highlighting that the Rights Issue provides shareholders with a chance to maintain their proportional stake in the company while ensuring that the bank has the necessary capital buffers to seize upcoming business opportunities. He also reminded shareholders that the rights issue received unanimous support during the company’s 11th Annual General Meeting (AGM) held on August 15, 2023.

For those interested in participating, Okonkwo noted that printed copies of the participation form can be easily accessed via the company’s website, FirstBank branches, and the offices of the issuing houses. The application process is also facilitated through the FirstMobile platform, making it convenient for shareholders to engage.

It is essential for shareholders to carefully review the rights circular and seek advice from their stockbrokers or portfolio managers if they have any questions or concerns regarding the process.

What’s at stake?
With the Central Bank of Nigeria (CBN) recently announcing a steep increase in capital requirements for tier-1 banks, First Bank of Nigeria faces a challenge. The new requirement stipulates that banks must raise their capital from N25 billion to N500 billion, with national banks requiring N200 billion. First Bank, with a current share capital of N251.3 billion, would need to secure an additional N248.7 billion to comply with these new regulations. The N150 billion raised through this rights issue represents approximately 60% of the minimum capital required to meet the CBN’s target.

As of now, FBN Holdings Plc trades at N28.75, a decline of N3.75 from the rights issue price. This situation presents both a challenge and an opportunity for existing shareholders to strengthen their stakes in a pivotal time for First Bank of Nigeria.

In conclusion, this rights issue not only positions FBN Holdings for compliance with regulatory requirements but also sets the stage for future growth. Shareholders are encouraged to act promptly and make informed decisions to capitalize on this rare opportunity.