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.

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.

In another move aimed at boosting domestic chip production, the United States has announced plans to award Taiwan Semiconductor Manufacturing Co. (TSMC) with $6.6 billion in grants and up to $5 billion in loans.

This initiative, part of President Joe Biden’s efforts to enhance critical technology manufacturing within the country, will support TSMC’s expansion in Arizona, where it will construct a third manufacturing facility.

The preliminary agreement, disclosed by US officials on Monday, outlines TSMC’s plans to build a cutting-edge fab in Phoenix, supplementing the two existing facilities in the state. With an anticipated operational timeline before the end of the decade, the third fab will leverage next-generation 2-nanometer process technology, essential for emerging technologies like artificial intelligence and military applications.

US Commerce Secretary Gina Raimondo emphasized the significance of producing advanced semiconductor chips domestically, highlighting the role of American workers in this endeavor.

“For the first time ever, we will be making at scale the most advanced semiconductor chips on the planet here in the United States of America,” Raimondo said during a briefing.

However, before TSMC receives any of the allocated funding, the company will undergo a due diligence period to finalize the agreement. Disbursement of funds will be contingent upon meeting construction and production milestones, with provisions for clawback if TSMC fails to fulfill its obligations.

“It will be months before TSMC receives any of the promised funding, as the company enters a due-diligence period before reaching a final, binding agreement,” the statement revealed. “Money will then be disbursed based on construction and production benchmarks, and could be clawed back if TSMC doesn’t hold up its end of the deal.”

This grant to TSMC represents a significant milestone in President Biden’s efforts to revitalize the US semiconductor industry under the 2022 Chips and Science Act. Encompassing direct grants, loans, and guarantees, the program aims to incentivize semiconductor companies to establish manufacturing facilities in the United States, reversing decades of overseas production shifts.

“TSMC’s award marks another milestone in Biden’s push to boost the US semiconductor industry with the 2022 Chips and Science Act,” the statement continued. “It’s one of the largest announced under the program, which set aside $39 billion in direct grants — plus loans and guarantees worth $75 billion — to persuade semiconductor companies to build factories in America after decades of shifting production abroad.”

Intel Corp. and Samsung Electronics Co. are among the beneficiaries of this initiative, with Intel securing a preliminary agreement for nearly $20 billion in grants and loans. The expansion of semiconductor manufacturing in Arizona aligns with Biden’s broader economic revitalization agenda, particularly in key battleground states like Arizona.

“Arizona has reaped some of the biggest rewards from the Chips Act, with a massive expansion by Intel in addition to dozens of supply-chain initiatives,” the statement revealed. “The TSMC grant includes $50 million in funding to train local workers, and will create 6,000 high-tech manufacturing jobs and more than 20,000 construction jobs, Raimondo said.”

The project is expected to create 6,000 high-tech manufacturing jobs and over 20,000 construction jobs in Arizona, accompanied by a $50 million funding allocation for local worker training initiatives.

The competition behind the push

Despite several setbacks, including labor conflicts and delays, the TSMC expansion in Arizona underscores the raging competition between China and the US to boost domestic chip production.

China’s efforts to boost domestic chip production have triggered a response from the United States, leading to initiatives such as the Chips and Science Act. China’s ambitious plans to become self-sufficient in semiconductor production, driven by its Made in China 2025 initiative, have raised concerns among US policymakers about national security and economic competitiveness.

China’s semiconductor industry has grown rapidly in recent years, fueled by significant investments in research and development, as well as government subsidies and incentives for domestic chipmakers. However, the United States views China’s efforts as a potential threat to its dominance in the global semiconductor market and a challenge to its technological leadership.

In response, the US government has introduced measures to strengthen its semiconductor industry and reduce dependence on foreign suppliers, particularly those from China. The Chips and Science Act, with its substantial funding provisions for semiconductor companies to build manufacturing facilities in the US, is one such initiative aimed at countering China’s influence in the semiconductor sector.

By providing financial support to companies like TSMC to expand their operations in the United States, the US government aims to bolster domestic chip production and maintain its technological edge in critical areas such as artificial intelligence and military applications.

Additionally, these efforts align with broader economic objectives, such as job creation and revitalizing manufacturing sectors in key states like Arizona.