The Nation Newspaper

Tag: capital raising

  • NSE to use blockchain, new technologies for capital raising

    The Nigerian Stock Exchange (NSE) is exploring the use of innovative technologies like Blockchain and Distributed Ledger Technology (DLT) as means of raising capital as part of the efforts to align the capital market with emerging financial technologies (fintech).

    Blockchain and DLT allow transfer and sharing of digital data across multiple sites without a central storage or administrator.

    NSE Chief Executive Officer Mr Oscar Onyema said the Exchange is considering creating alternative and innovative platforms for capital raising through the use of new technologies such as Blockchain and DLT.

    He said fintech offers opportunity to deepen the capital market and also achieve sustainable economic growth by empowering a larger portion of the populace to access financial services while simultaneously unlocking efficiencies in product and service delivery for financial institutions as well as increasing transparency and resilience of the Nigerian capital market and larger financial ecosystem.

    Onyema pointed out that while the NSE is focused on delivering on its mandate to be Africa’s Preferred Exchange Hub, the bigger picture for the Exchange is to create a dynamic marketplace that fuels growth and empowers people towards excellence in business and ventures.

    He said the Exchange has also demonstrated its supports for fintechs and start-ups with the introduction of the growth board of the Exchange, which caters for companies with high growth prospects, especially fintechs emerging from venture capital management to a more mature management that would require public investment and corporate consolidation.

    He added that with the support from the Exchange, companies with high growth potential will be able to leverage public finance for growth and expansion.

    Onyema, who spoke at a fintech event hosted by the NSE, said the theme of the event: Growth Funding and Strategic Capital Raise – Extending Financial Inclusiveness through the Capital Market” is of particular interest to the Exchange due to its connection to its core function as a hub for accessing capital.

    According to KPMG’s “2018 Global Analysis of Investment” equity investment into global FinTech companies almost tripled from $18.9 billion to $50.8 billion between 2013 and 2017; and has continued to gain traction.

    “The global picture of capital flow into fintechs especially in emerging markets is proof that FinTechs are important economic catalysts in the 4th Industrial Revolution. Surprisingly, foreign investors seem to be seeing these gains better than local investors as statistics show that they have dominated capital raise for indigenous start-ups in the last couple of years,” Onyema said.

  • Flour Mills concludes N39.9b capital raising

    Flour Mills of Nigeria Plc recorded full subscription to its recent N39.9 billion rights issue, increasing the equity base of Nigeria’s largest flour-milling conglomerate.

    Regulatory report at the Nigerian Stock Exchange (NSE) at the weekend indicated that a total of 1.476 billion ordinary shares of 50 kobo each were listed as additional shares in Flour Mills of Nigeria’s name. The additional shares arose from the N39.9 billion rights issue.

    Flour Mills of Nigeria had sought to raise N39.85 billion through a rights issue of 1.476 billion ordinary shares of 50 kobo each at N27 per share. The rights were pre-allotted to shareholders on the basis of nine new ordinary shares of 50 kobo each for every 16 ordinary shares of 50 kobo each held as at Friday December 8, 2017. Application list for the rights opened on Monday January 15, 2018 and closed on Wednesday February 21, 2018.

    With the supplementary listing, the total issued and fully paid up shares of Flour Mills of Nigeria now stands at 4.10 billion ordinary shares of 50 kobo each. The listing paved the way for trading on the supplementary shares.

    The success of the new capital raising placed the flour-milling group in a better position to strengthen its balance sheet and support business growth.

    Its Chairman, Mr. John Coumantaros, had said the rights issue would be used primarily to pay down some of the company’s outstanding short-term debt in order to reduce its finance costs, which have increased significantly in recent times.

    He said the company will maintain and expand its market leadership across all its five core businesses and value chains.

    He outlined that Flour Mills will improve route and extend its distribution footprint and launch new innovative consumer products like Gari, Margarine, spread, soya and vegetable oil, among others.

    The company, he added, will continue to focus on supply chain security through import substitution and value chain diversification. “We will also continue to improve in our processing facilities and manufacturing excellence, which will lead to productivity and efficiency gains,” Coumantaros said.

    Flour Mills of Nigeria Group Managing Director, Mr. Paul Gbedebo, explained that the rights issue was part of the group’s strategy to grow and build long-term value for all stakeholders.

    “The proceeds from the rights issue will be used to strengthen the company’s capital base by deleveraging our balance sheet, supporting our working capital needs and positioning the company to exploit value-accretive opportunities, whilst giving greater operational and financial flexibility to ensure business growth and continuity,” Gbedebo said.

    He noted that Flour Mills has a long and rich history in Nigeria and continues to evolve into becoming the leading food and agro-allied group in Africa.

     

    According to him, Flour Mills’ commitment to sustainability as a corporate strategy is shown in different levels of its operations and activities, while the company’s customer-centric culture remains focused on both product and process innovation aimed at building value for all stakeholders.

     

  • Shareholders approve N100b new capital raising for Access Bank

    Shareholders approve N100b new capital raising for Access Bank

    Shareholders of Access Bank Plc yesterday authorised the board of the bank to raise up to N100 billion in new capital as part of plan to optimise the balance sheet and capital structure of the bank.

    At the 27th annual general meeting in Lagos on Wednesday, shareholders authorised the bank to raise additional debt capital of up to N100 billion through the issuance of non-convertible loans, notes, bonds and any other instruments either as a stand-alone issue or by establishing a debt issuance programme.

    The resolution empowered the board of directors to undertake the new debt issue by way of a public offering, private placement, book building process, reverse call enquirer or any other method or combination of methods, in such tranches, series or proportions and at such dates, coupon or interest rates within such maturity periods and upon such terms and conditions as may be determined by the board of directors subject to obtaining the requisite approvals of the relevant regulatory authorities.

    The board of the bank explained that the new capital issue was in line with the strategic growth objectives and prudent risk management of the bank with the overall goal of enhancing the bank’s funding, capital base and profitability through an efficient capital structure.

    “This need is underscored by the growing scale of regulatory headwinds and economic realities which have further put demands on capital. This is further strengthened by the fact that from 1 July 2016, the Capital Adequacy Ratio for Systemically Important Banks (SIBs) is being increased from 15 per cent to 16 per cent,” the board stated.

    Shareholders also approved payment of a final dividend of N8.68 billion in addition to earlier interim dividend of N7.23 billion, bringing total dividend for the 2015 business year to N15.9 billion. The breakdown of the dividend recommendation indicates that shareholders will receive a final dividend per share of 30 kobo, in addition to interim dividend per share of 25 kobo, bringing total dividend per share to 55 kobo.

    Shareholders who spoke at the meeting generally commended the resilience of the bank in the face of macro and industry headwinds.

    National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu noted that the bank has remained resilient in the face of harsh operating environment.

    He said the performance of the bank was a pointer that the future is promising, urging the bank to improve on the dividend payouts in the coming years as it has all it takes to surpass other lenders in the country.

    Chairman, Access Bank Plc, Mrs. Mosun Belo-Olusoga assured on the prospects of the bank notwithstanding the changes in the macroeconomic environment.

    “The bank is in a position of strength for the future-we have a solid franchise that allows us to continue to succeed during difficult economic times. We have a conservative risk profile that has placed us in a position of advantage amidst the economic storm and we are investing for long-term growth, which will allow us to capitalise on opportunities as we eventually emerge from the downturn,” Belo-Olusoga said.

    Chief executive officer, Access Bank Plc, Mr. Herbert Wigwe said the bank remained committed to delivering value to its shareholders as it continues to maintain and sharpen focus on the execution of its strategy to create a large diversified bank with a strong retail base.

    “We are well-positioned to leverage promising market opportunities in target sectors and to enhance our digital banking capabilities, with the ultimate goal of delivering superior service to customers and sustainable returns to investors. Access bank will cautiously maximize its strong capital position to realise the full value of its network, with the aim of attaining strategic objectives,” Wigwe said.

    Key extracts of the audited report and accounts of Access Bank for the year ended December 31, 2015 showed considerable growth across the key indices. Gross earnings rose by 37.5 per cent from N245.38 billion in 2014 to close at N337.40 billion in 2015. Operating income rose by 39 per cent to N234.8 billion in 2015 as against N168.4 billion in 2014. Profit before tax grew by 44 per cent from N52.02 billion to N75.04 billion. Profit after tax improved by 53.3 per cent to N65.9 billion in 2015 as against N42.98 billion in 2014. Earnings per share thus improved from N1.85 in 2014 to N2.62 in 2015. Return on average equity (ROAE) improved to 20.4 per cent in 2015 as against 16.5 per cent in 2014.

  • Companies look to fourth quarter for capital raising

    The primary market would be quite active in the fourth quarter as many companies plan to kick off their capital raising during the period.

      The Nation’s investigation indicated that not  less than six companies night raise some N160 billion in the fourth quarter, more than N156 billion raised by eight companies in the first three quarters.

    Shareholders of UAC of Nigeria (UACN) Plc are meeting today to consider and approve additional capital raising, including offering special equity stakes to strategic investors and raising new capital through equity and debt issues. UACN plans to undertake two private placements to strategic investors while also raising capital through rights issue to existing shareholders and an unspecified new issue to the general investing public. The Nation’s investigation indicated that UACN might raise as much as N40 billion in the multi-level capital issue.

    Shareholders are expected to approve several resolutions including one that empowers the board to raise N20 billion through any means of capital raising and another resolution that mandates the board to offer some 160.07 million ordinary shares of 50 kobo each to existing shareholders on the basis of one new ordinary share for every 12 shares held as at the closure date.

    In a major strategic move, the conglomerate is seeking to undertake a private placement of 230 million convertible non-redeemable preference shares of 50 kobo each to pre-identified investors at a price of N45 per share.

    In another private placement, the board is proposing a private placement of 100 million convertible non-redeemable preference shares of 50 kobo each to pre-identified investors at a price of N50 per share.

    Under the proposed terms of private placement, the preference shares shall be convertible to ordinary shares within five years on terms to be agreed by the directors. The preference shares holders would not be entitled to dividends but they would be entitled to any distribution of assets and they can attend general meeting and vote as well.

    To facilitate the new capital issue, shareholders of UACN are expected to increase the conglomerate’s authorized share capital from N1 billion divided into 2.0 billion ordinary shares of 50 kobo each to N1.7 billion, consisting of 3.0 billion ordinary shares of 50 kobo each and 400 million preference shares of 50 kobo each.

    Already, Flour Mills of Nigeria Plc has submitted application for regulatory approval to raise N30.25 billion through a proposed rights issue. Flour Mills plans to offer 1.09 billion ordinary shares of 50 kobo each to existing shareholders at N27.50 per share.

    Stanbic IBTC Holdings Plc, the holding company for Stanbic IBTC Bank and other subsidiaries, had earlier received regulatory approval to raise N20.4 billion from its shareholders. Stanbic IBTC Holdings plans to issue 800 million ordinary shares of 50 kobo each to existing shareholders at N25.50 per share. The rights issue will be pre-allotted to shareholders in the book of the company on the basis of two new ordinary shares for every 25 ordinary shares. Stanbic IBTC Holdings’ new issue has however been placed on hold pending the resolution of ongoing investigations by financial services regulators.

    Skye Bank Plc, which had planned to raise about N30 billion in new equity funds in the third quarter, was said to be considering floating the supplementary offer in the fourth quarter.

    Group managing director, Skye Bank Plc, Mr. Timothy Oguntayo, had said the bank would be raising some N30 billion tier 1 capital, referring to new equity funds. While Skye Bank is still finalizing the details of the equity issue, there are indications that the supplementary issue will include an element of rights issue.

    Eight companies had raised N155.7 billion in the first three quarters of this year. Three banks- Diamond Bank Plc, Access Bank and United Bank for Africa (UBA) Plc accounted for a total of N103.6 billion, 66.5 per cent of the N155.7 billion. Others included Prestige Assurance Plc, which raised N1.5 billion and Sovereign Trust Insurance Plc, which sourced N1.14 billion from existing shareholders.

    Head, financial advisory group, GTI Capital Group, Mr. Hassan Kehinde, said the primary market might be more active in the latter part of the year as issuers take advantage of expected improvement in the market outlook in the fourth quarter.

    He said rights issue would continue to account for larger part of new equity raising. Rights issue gives the first right of refusal to existing shareholders and thus preserve existing shareholding structure. It however provides window for new investors to buy into the company through rights trading on the secondary market.

    Chief executive officer, Finawell Capital Limited, Mr. Tunde Oyekunle, said the preference for rights issue might not be unconnected with the lingering apathy and erosion of investors’ confidence that arose from market downturn in 2007, which has continued to haunt the primary market.

    He said some companies are also mindful of the shareholding dilution that may likely come from public offers while management of some companies feel existing shareholders will understand management strategy and trust their investment with them than new shareholders.

    “Most companies are embarking on rights issues due to the certainty that they can raise the required funds from existing investors, particularly the institutional shareholders and some large bloc holders who may be fully committed to retain their shareholding positions in the companies. Those shareholders will definitely have a buy in into such rights issues before they are floated. Another reason is that public offers may not necessarily get patronage or commitment from new investors due to the current state of the market,” said Sewa Wusu, economist and head of research and investment advisory at Sterling Capital Markets Limited.