Emmanuel OchayiPublic Offer and Rights Issue Begin
Fidelity Bank Plc, Nigeria’s sixth-largest bank, On Thursday, June 20 kicks off the public offer and rights issue, raising up to N127.1 billion.
The bank’s strategy aims to comply with the Central Bank of Nigeria’s (CBN) revised minimum capital requirements for commercial banks, introduced on March 28, 2024.
Details of the Rights Issue and Public Offer
Under the rights issue, 3.2 billion ordinary shares of 50 kobo each, will be offered at N9.25 per share in a 1-for-10 ratio to existing shareholders as of January 5, 2024. Additionally, the public offer will present 10 billion ordinary shares, at N9.75 per share to the general public.
The application period for both offers will open on June 20 and close on July 29, 2024.
Purpose and Strategy
Fidelity Bank’s Combined Offer aims to increase its share capital base. According to Nneka Onyeali-Ikpe, Managing Director and CEO of Fidelity Bank Plc, the proceeds will be used for investments in IT infrastructure, business expansion, and enhancing product distribution channels.
“Raising this capital will enable us to drive sustained growth and diversify our earnings base,” said Onyeali-Ikpe at the signing ceremony.
Management and Market Reaction
Stanbic IBTC Capital is the lead issuing house for the offer, with several joint issuing houses, including Iron Global Markets Limited, Cowry Asset Management Limited, and Afrinvest Capital Limited. Stanbic IBTC Capital’s CEO, Oladele Sotubo, praised Fidelity Bank’s management for their dedication to meeting the CBN’s capital requirements.
READ ALSO: Why Fidelity Bank Began Recapitalisation Before CBN Directive – Executive Director Amuchie
“The commitment shown by Fidelity Bank is commendable and sets a benchmark for other corporations considering equity capital markets to fund their strategic needs,” Sotubo stated.
Market Performance and Investor Sentiment
Fidelity Bank’s share price has seen significant growth, rising from N1.68 per share on May 31, 2019, to N10.20 per share by the end of May 2024. Market indices also reflected this positive trend, with the NGX Banking Index increasing from 361.57 points to 797.37 points over the same period.
David Adonri, Managing Director of HighCap Securities Limited, commented, “The price of any stock in the market reflects its true market value.”
Aruna Kebira, Managing Director of Globalview Capital Limited, added, “Market price represents the disposition of the investing public towards the stock at a given period.”
Investor Recommendations and Future Prospects
Investment analysts have consistently rated Fidelity Bank as a “BUY,” citing its operational performance and clear growth strategy. Reports from Afrinvest Group, FSDH Capital, and CardinalStone highlight the bank’s strong board and management, as well as its robust human capital resources.
Analysts agree that Fidelity Bank’s share price could potentially double in the near future, based on professional assessments of performance parameters and investor preferences.
Expansion and Strategic Moves
Recently, Fidelity Bank received a $40 million Intra-African Investment Facility from the African Export-Import Bank (Afreximbank). This fund supports the bank’s acquisition and recapitalisation of Union Bank UK, part of its international expansion program. This move positions Fidelity Bank to provide correspondent and offshore banking services to African banks and meet the banking needs of Africans in the diaspora.
Impressive Returns and Investment Opportunities
Fidelity Bank has delivered an average annual return of 101.43% over the past five years, outpacing major benchmarks in the Nigerian stock market. The bank’s shares have provided substantial returns, making them an attractive investment option compared to fixed-income securities, real estate, and mutual funds.
With a 507% capital gain over five years and an average annual gain exceeding 100%, Fidelity Bank stands out as a premier investment option, appealing to a wide range of investors. The high free float of its shares ensures their availability, making them accessible for small, medium, and high-net-worth investors alike.
Fidelity Bank’s robust performance and strategic initiatives underscore its potential for continued growth and value creation for shareholders. The public offer and rights issue presents a timely opportunity for investors to participate in the bank’s promising future.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
