Category: Equities

Fidelity Bank Plc yesterday opened application lists for its N127.1 billion combined rights and public offer, with an assurance that the bank would surpass the new minimum capital requirement of N500 billion to retain its international banking licence.

At a “Facts Behind the Combined Offer” interactive session at the Nigerian Exchange (NGX), Fidelity Bank cited its history of outstanding growths, impressive returns to shareholders with average annual return of more than 100 per cent over the past five years, business expansion and a stable and resilient business model as some of the attractions for its shares.

Managing Director, Fidelity Bank Plc, Dr Nneka Onyeali-Ikpe, has a clear pathway to achieving the N500 billion new minimum capital base, which will clearly confirm the bank, beyond any doubt, as one of the biggest banks in Nigeria.

She explained that the new capital raising by Fidelity Bank was driven by its proactive business expansion plan having secured shareholders’ approval to raise new equity funds as early as August 2023. The Central Bank of Nigeria (CBN)’s directive on new minimum capital was released in March 2024.

Fidelity Bank is offering a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The bank is also simultaneously offering 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.

The acceptance and application lists for the rights issue and public offer, which opened yesterday, are scheduled to close on Monday, July 29, 2024. The rights issue has been pre-allotted on the basis of one new ordinary share for every 10 existing ordinary shares held as at the close of business on Friday, January 05, 2024.

Onyeali-Ikpe noted that being the first bank to launch offer out of the many banks in Nigeria after the CBN directive, Fidelity Bank has shown again to be a pace-setter.

She noted that the bank’s capital raising process was practically initiated after obtaining approval from shareholders in August, 2023, stressing that the exercise is part of the management’s strategic growth plan to raise additional capital to meet its growth needs.

“Given that Fidelity Bank has already started the process of raising additional capital ahead of CBN’s directive, requiring the banks to raise a minimum capital base of N200 billion for national banks and N500 billion for banks with international operations like ours, amongst other capital requirements.

“This didn’t come as a surprise to us. As for us at Fidelity Bank, the CBN recapitalization directive presents a significant opportunity for a stronger and more resilient banking industry.

“We have embraced the challenge as a catalyst to propel us, towards a long-term vision of becoming a market leader across every product that we offer and segment that we sell, not just in Nigeria, but as an international bank,” Onyeali-Ikpe said.

She said the proceeds from the N127.10 billion capital raising exercise would be instrumental in achieving its strategic growth plan.

She highlighted that the funds, firstly, would be deployed to drive, business growth and regional expansion.

“We will strategically expand our footprints within and outside Nigeria to serve as a broader customer base and to unlock new market opportunities.

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“Secondly, we will have what we call technological transformation. We are committed to leveraging proprietary technology to improve operational efficiency and deliver exceptional customer service. 

“Thirdly, we intend to diversify and grow. By investing in information technology (IT) infrastructure and product distribution channels, we will aim to diversify our earnings base through digitalization and business expansion.

“The offer will increase our capacity to support our customers and their businesses. In summary, this capital raise will help our customers to grow, their businesses to thrive, and their economy to prosper,” Onyeali-Ikpe said.

She, said the management recognized the importance of investors and are committed to delivering value to them as well.

“Our track record of accelerated growth and consistent dividend payment is a testament to this,” Onyeali-Ikpe said.

Chairman, Fidelity Bank Plc, Mr. Mustafa Chike-Obi, who was represented by a non-executive director, Alhaji Isa Inuwa, said the bank’s target is to surpass the N500 billion capital requirement.

He noted that Fidelity Bank has strong and sustainable fundamentals, which should appeal to discerning investors.

According to him, the bank is confident that its records of returns on investments and growths over the years would convince investors to buy more stakes in the bank.

Executive Director, Fidelity Bank, Mr. Stanley Amuchie in a presentation said the commercial bank has a strong market positioning in the Nigerian banking industry, stressing that notwithstanding the significant changes in the competitive landscape of the Nigerian banking sector, it has continued to perform well.

“Due to the advances in technology and rapid evolution of banking business, it is imperative that Fidelity Bank is properly positioned to remain a competitive and forward-looking institution,” Amuchie said.

According to him, Fidelity Bank is seeking to undertake landmark projects and business initiatives that would redefine its business structure, diversify earnings base and grow market share in the real sector of the economy.

“Fidelity Bank plans to capitalise on the vast opportunities available in Nigeria by expanding its existing domestic business.

“The Bank aspires to expand its service touchpoints to select African countries, taking a cautious but value driven approach towards foreign market entry.

“Fidelity Bank is committed to its strategic plan of providing straight-through services that meet and exceed the needs of its growing clientele,” Amuchie said.

He stated that the bank remains focused on growing its reach within and beyond Nigeria, amplified by the acquisition of Union Bank UK Plc.

“Sustained year-on-year growth in asset base, revenue and profit; increased capital will guarantee sustained growth and shareholder return,” Amuchie said.

Chairman, Nigerian Exchange (NGX), Mr. Ahonsi Unuigbe said the combined offer marked a pivotal moment for the bank and the financial services sector.

“This is a testament to Fidelity Bank’s unwavering commitment to strengthening its own capital base and ensuring sustainable growth through amazing roles played by all of the professional parties to this transaction,” Unuigbe said.

• Facts behind the offer holds at NGX

Fidelity Bank Plc will today open application lists for its N127.2 billion combined rights and public offer, in the first capital raising under the banking recapitalisation exercise mandated by the Central Bank of Nigeria (CBN). 

Fidelity Bank is offering a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The bank is also simultaneously offering 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.

The acceptance and application lists for the rights issue and public offer, which open today, are scheduled to close on Monday, July 29, 2024.

The rights issue has been pre-allotted on the basis of one new ordinary share for every 10 existing ordinary shares held as at the close of business on Friday, January 05, 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 CBN on March 28, 2024.

The bank expects that the additional equity capital to support its efforts to drive sustained growth and diversification of earnings base.

The bank’s shareholders had already approved the rights issue and public offer at the extra-ordinary general meeting held in August 2023.

Managing Director, Fidelity Bank Plc, Dr. Nneka Onyeali-Ikpe, said the net proceeds of the combined offer would be applied towards investment in information technology infrastructure, business and regional expansion, and investment in product distribution channels.

With more than 397,000 shareholders, Fidelity Bank’s shares are widely held with no shareholder holding five per cent or more of the bank’s issued share capital.

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The bank has history of successful capital raising. It had in 2013 raised $300 million in its inaugural Eurobond. It followed this with a N30 billion unsecured domestic corporate bond in 2015. In 2017, Fidelity Bank issued another Eurobond, raising $400 million. Under a 10-year Tier II domestic corporate bond, the bank raised N41.2 billion in 2021 and also another $400 million Eurobond same year. The bank successfully raised N13.97 billion in new equity funds through a private placement.

Stanbic IBTC Capital is the lead issuing house to the combined offer. 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.

A recent review had shown that Fidelity Bank outperformed all major market indices for measuring returns at the Nigerian stock market, with the bank’s average annual return over the past five years twice the average return by the overall market and almost four times of average return in the banking sector.

A review of official trading reports at the Nigerian stock market showed that investors in Fidelity Bank have earned more than 507 per cent in capital gains over the past five years, between May 31, 2019 and May 31, 2024

Fidelity Bank’s share price rose by 507.14 per cent over the period, representing average annual capital gain of 101.43 per cent. This significantly exceeds all other major return benchmarks, including the banking sector.

With 507 per cent capital gain in five years and average annual gain of more than 100 per cent, the return analysis implies that investment in Fidelity Bank is more attractive than other class of assets, including fixed-income securities such as government and corporate bonds; real estate investment and mutual funds among others.

These returns underscore Fidelity Bank’s immense value as a stock for all times, helping investors to hedge against inflation while preserving significant long-term value.

The high divisible nature of shares investment and high free float of Fidelity Bank, which makes the bank’s shares easily available, underline the bank as a most attractive investment option for all cadres of investors- small, medium and high networth; retail and institutional investors. 

The All Share Index (ASI) – the common, value-based index that tracks all share prices at the Nigerian Exchange (NGX), which is widely regarded as Nigeria’s benchmark for equities market, recorded a five-year return of 219.61 per cent, an average annual return of 43.9 per cent.

Contrary to the significantly above average performance of Fidelity Bank, the NGX Banking Index-which tracks the banking sector, doubled by 120.53 per cent over the five-year period, representing average annual return of 24.11 per cent, more than 77 percentage points below Fidelity Bank’s average return.

Two other major price indices- the NGX 30 Index and NGX Main Board Index, recorded five-year cumulative return of 185.73 per cent and 265.6 per cent respectively, representing average annual gain of 37.15 per cent and 53.1 per cent respectively.

The NGX 30 Index tracks share prices of the 30 largest companies at the stock market while the NGX Main Board Index represents the largest and most diversified group of listed companies at the stock exchange. Fidelity Bank is quoted on the main board, like most other major banks and companies at the stock market.

The average annual return of 101.43 per cent underlines that Fidelity Bank provides substantial return for investors, even where such investors had borrowed money at the ruling interest rate and the invested fund was adjusted for impact of inflation rate.

Nigeria’s inflation rate peaked at a high of 33.69 per cent in April 2024 while the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) recently increased the Monetary Policy Rate (MPR), otherwise known as benchmark interest rate, to 26.25 per cent.

Fidelity Bank’s share price, which closed May 31, 2019 at N1.68 per share, rose successively to N10.20 per share by the end of May 2024. The ASI had, during the period, rose from its opening index of 31,069.37 points to close weekend at 99,300.38 points. The NGX Banking Index rose from 361.57 points to 797.37 points. The NGX 30 Index, which opened the period at 1,286.68 points, closed the period at 3,676.44 points. The NGX Main Board Index appreciated from 1,267.54 points to close weekend at 4,634.31 points.