First Bank Holding Plc, a prominent player in Nigeria’s banking sector, is set to embark on a substantial capital-raising endeavor, with plans to seek shareholders’ approval for a staggering N300 billion injection.
This critical decision is set to be deliberated upon at the group’s Extraordinary General Meeting (EGM) scheduled to take place virtually on Tuesday, April 30, 2024.
“To consider and if thought fit, pass the following as ordinary resolutions of the company: That the company be and is hereby authorized to undertake a capital raise of up to N300,000,000,000.00 (Three hundred billion naira),” FBN Holdings said.
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Outlined in the group’s amended notice of the EGM, the proposed capital raise aims to fortify the bank’s financial position and support its growth trajectory. The multifaceted approach to the capital raise encompasses share issuance through public offer, private placement, or rights issues in both Nigerian and international capital markets. The pricing mechanism will be determined via a book-building process or other valuation methods, ensuring a comprehensive approach to determining fair market value.
The notice further articulates the flexibility of the capital raise, allowing for issuance in tranches, series, or proportions, with the board of directors empowered to decide on pertinent terms and conditions, subject to regulatory approvals. Additionally, shareholders will be presented with special resolutions pertaining to underwriting arrangements, listing and trading of securities, and necessary actions to facilitate the capital raise process.
The resolutions:
That the capital raise referred to in resolution (a) above may be underwritten on such terms as may be determined by the directors subject to obtaining the approvals of the relevant regulatory authorities.
That the directors be and are hereby authorized to undertake all necessary actions to secure the listing and admission to trading of securities issued pursuant to the foregoing resolution on the official list of the Nigerian Exchange Limited, and/or on any other securities exchanges or market.
That the directors be and are hereby authorized to appoint such professional parties and advisers and to perform all such other acts and do all such other things as may be necessary, to give effect to the above resolutions, including without limitation, executing necessary documents in connection with the capital raise, determining the final structure of the capital raise, interfacing and complying with the directives of any regulatory authority.
Upon completion of the process for allotment of the new ordinary shares in accordance with the resolution above, the Memorandum and Articles of Association of the Company be amended as necessary to reflect the company’s newly issued share capital.
The financial performance of FBN Holdings underscores the rationale behind this strategic move. In FY 2023, the group witnessed a remarkable growth trajectory, with a profit before tax soaring to N362.24 billion, marking an impressive 129% surge from the previous fiscal year’s figure of N157.90 billion. The substantial growth was underpinned by robust interest income, which surged to N917.71 billion, reflecting a noteworthy 66% increase compared to FY 2022.
A significant contributor to this stellar performance was the recognition of a gain of N251.10 billion attributable to the devaluation of the Naira, primarily stemming from exchange differences in the translation of foreign operations. Notably, in Q4 2023, the group recorded a pre-tax profit of N91.91 billion, signaling a substantial year-on-year growth of 75% from Q4 2022.
The group’s balance sheet also witnessed remarkable expansion, with total assets swelling to N16.90 trillion in FY 2023, representing an impressive 60% growth from FY 2022. First Bank of Nigeria Limited, the commercial banking arm of FBN Holdings, emerged as a stalwart performer, generating a remarkable 93% (N1.42 trillion) of the group’s total revenue (N1.52 trillion) in FY 2023.
Noteworthy upticks were observed in investment securities, which increased by 31% to N3.05 trillion, and deposits from customers, which surged by 53% to N10.87 trillion in FY 2023, underscoring the bank’s resilience and growth prospects.
The proposed capital raise, if approved by shareholders, will fortify the bank’s financial foundation, getting it closer to the recapitalization requirement. First Bank is among the banks required by the CBN to recapitalize with as much as N200 billion.