- Retail shareholders back N239.4b rights issue
Shareholders across Nigeria’s leading shareholders’ associations have embarked on massive mobilisations for the ongoing N239.4 billion rights issue by United Bank for Africa (UBA) Plc.
A survey of shareholders and receiving agents showed that the N239.4 billion rights issue got off to a momentous start with shareholders indicating interests to buy more shares in the pan-Africa banking group.
UBA is offering 6.84 billion ordinary shares of 50 kobo each to existing shareholders at N35 per share. The rights issue is pre-allotted on the basis of one new ordinary share of 50 kobo each to every five ordinary shares held as at November 05, 2024. The rights issue is scheduled to close on December 24, 2024.
Shareholders described the rights issue as an opportunity to lock in more values in the bank that has shown exceptional returns to shareholders.
UBA, which pays dividends twice a year, recently paid interim dividend of N2 per share on its first half results, the highest payout by any bank and one of the three highest yields in the entire stock market.
Retail shareholders, who play actively in the Nigerian market, said they would pick up their rights and use the window for additional shares to request for more shares.
Shareholders’ leaders, who hold board positions in several quoted companies, said they have embarked on nationwide sensitisation to ensure that shareholders do not miss out the opportunity and that every shareholders have fair access and right to participation in the rights issue.
Minority retail shareholders constitute nearly three-quarters of UBA’s nearly 280,000 shareholders. More than 200,000 shareholders hold between one and 10,000 ordinary shares in one of Nigeria’s oldest most-widely owned banking group. Only one shareholder holds substantial equity stake of 5.30 per cent, as at the last audit.
In separate interviews, shareholders leaders and activists said the UBA has a long history as an institution that places shareholders’ interests foremost in its decision-making.
They cited the bank’s outstanding performance in creating values for shareholders through capital gains and dividends as well as its unique decision to distribute free shares to all shareholders that made them to be shareholders in at least four companies, all paying them dividends regularly.
The shareholders were making reference to the situation in 2010 when the Central Bank of Nigeria (CBN) repealed universal banking licenses and issued the Regulation on Scope of Banking Activities & Ancillary Matters, No. 3 which became effective on November 15, 2010; prohibiting banks from undertaking non-banking activities.
While several banks had then opted to sell their non-banking subsidiaries, UBA alone had decided in a unique approach decided to unbundle the subsidiaries as standalone companies through distribution of their shares to all shareholders. Shareholders have since been receiving dividends from the UBA and the unbundled companies; all that have also seen significant capital appreciation at the stock market.
Shareholders’ leaders who spoke included Founder, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu; President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr Faruk Umar; A shareholders’ activist and leader, Mr. Adeleke Adebayo; National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude; National Coordinator, Pragmatic Shareholders Association of Nigeria, Mrs. Bisi Bakare and National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie.
Nwosu said UBA’s longstanding history of positive disposition to shareholders have endeared the group to the investing public.
He said the bank has proven to be dependable and resilient noting that not only is UBA doing extremely well in its home market, but all its subsidiaries across Africa and beyond are also doing well.
Nwosu, who sits on the board of many companies, urged shareholders to pick up their rights, affirming that he and members have already indicated interests in picking up their rights.
“The bank is doing well, so also are its subsidiaries. From whatever angle you look at it, UBA is a good buy. And I’m talking as a long-time shareholder. It is one bank that prioritises shareholders’ happiness. Go down the lane and check the bank’s dividend history and critical decisions when it comes to shareholders’ issues. It’s a bank one can rest on, so, I’m advising other shareholders to pick up their rights, it’s an opportunity. We are picking up ours and even asking for more,” Nwosu said.
Umar said the decision to undertake a rights issue to existing shareholders underscores continuing trust between the bank and its shareholders.
Citing the performance of the bank in the past three quarters and its record-setting interim dividend of N2 per share, Umar described UBA as a “solid bank” with a lot more to offer the shareholders in the future.
“I strongly advise shareholders to pick up their rights as I am very hopeful the price will go up after the rights offer is concluded. All members of our Association are going to buy their rights as we strongly believe in the quality of the board, management, and staff of the bank. All the UBA- related companies including Transcorp Hotels, United Capital, Transcorp Energy, African Prudential, and Transcorp Plc are doing so well and their performance attests to the valuable leadership we are getting from Mr. Tony Elumelu and his team,” Umar said.
Adebayo said UBA’s rights issue is good and well-structured with potential for less dilution and stronger earnings potential.
He said he would definitely pick up his rights given the positive outlook for the bank.
“My advice to other shareholders is to try and pick up their rights. UBA has made phenomenal progress over the years. Its growth and expansion are legendary. It has witnessed a very stable leadership and given consistent value to shareholders,” Adebayo, who sits on the board of other quoted companies, said.
Igbrude said shareholders should see the recapitalisation as both an opportunity to buy more shares and to stand with a good company that has shown commitment to shareholders’ value-creation.
“The ongoing UBA’s right issue is a good buy any day, any time. The bank is on very good standing with a very strong balance sheet, well spread within Nigeria and across Africa. As for me, I’m picking my right, I must contribute to my bank’s recapitalisation exercise,” Igbrude said.
Bakare commended the decision of the bank to launch its offer at this time.
She said the general opinion among shareholders already pointed to the fact that UBA’s rights issue is going to be hugely successful.
“I believe the UBA’s rights issue is going to be successful considering the antecedents of the group for all its years in the capital market. For two decades, there’s no financial year UBA didn’t pay dividends to her shareholders. Investors have benefited in terms of capital appreciation too. You know that UBA recently declared N2 interim dividend for the half year result.
“I will advise shareholders to take up their rights. This is a great opportunity for shareholders of UBA. Over the years, UBA has been very friendly to her investors. The only bank that investors benefitted from its subsidiaries, which made us, UBA shareholders, also shareholders in United Capital Plc, Afriland Properties Plc and Africa Prudential Plc. Based on all the above, I’m quite sure the offer is going to be successful. We are picking our rights and mobilising for more,” Bakare
Okezie said investors stand to reap significant capital gains and dividends given what UBA is doing in the banking sector.
He also commended the bank’s board and management for their investors’ friendly disposition, which places the bank ahead of others and makes it an investment for the general masses.
“It is my opinion that the share price will continue to rise even after the offer, so investor will be happy that they took their rights. I urge the bank to continue in the trajectory of paying good dividends to shareholders.
“As for me, I will pick up mine, I equally advise other shareholders to take their rights. One thing is sure, UBA has been friendly to investors. Yes, I can say it has remained cordial and the management team has not been aloof to their shareholders. I can attest to the hard work of the Group Managing Director, who is in charge running the affairs of the bank day to day. I don’t see any person who is going to regret picking up his rights. At the end, it is going to be win-win,” Okezie said.
