A Review of the Nigerian Energy Industry

Access Bank, UBA Succeed with N64bn Rights Issues

17 April 2015, Lagos – Strong indications have emerged that Access Bank Plc and United Bank for Africa Plc have succeeded with their rights issues despite the lull that prevailed in the capital market during the issues.

Access BankUBABoth banks had early  this year floated the rights issues.While UBA  made a rights issue to raise N11.5 billion from existing shareholders, Access  Bank made  a rights issue to raise N52.6 billion from its shareholders.

Both  funding raising exercises took place  at a  time when the capital market was in lull with many investors trending cautiously due to apprehension over the then impending general elections among other factors.

However, THISDAY checks have revealed that both financial institutions succeeded in raising the funds they requested. Although the banks are awaiting the Securities and Exchange  Commission (SEC) to approval the offer results, sources close to the issuing houses said they were successful.

“I can confirm to you that the rights issue was fully subscribed. We are only waiting for SEC to approve the  offer results before making it public,” the source said.

Market operators said given the bearish state of the market during the issue period, the  success of offers indicates the confidence shareholders have in the two financial institutions. The two banks had approached shareholders to raise a total of N64.1 billion, with. Access Bank raising the highest of N52.6 billion.

UBA had initially made a rights issue of 3.3 billion shares at N4 per share raise N13.2 billion. But the bank had to reduce the offer price to N3.50 per share to raise N11.5 billion.  According to UBA, the net proceeds of the  rights issue  would be used to finance its business development plan aimed at further entrenching itself as the leading bank in Africa.

On the other hand, Access Bank Plc issued 7.627 billion shares to shareholders at N6.90  to raise N52.6 billion. The proceeds of the issue will be used to boost the bank’s working capital, enhance its information technology and expand branch network, which is expected to ultimately lead to improved performance and returns. Commenting rights issue,  the Group Managing Director of Access Bank, Mr. Herbert Wigwe, said, “We are going to give good returns on investment as our target is to be among top three banks in 2017.”

According to him, the capital raising falls in line with bank’s five-year corporate strategy plan to be one of the top three banks in the country and the “world’s most respected African bank”.

“This will be anchored on four critical pillars – capital, human capital, governance and risk management. It will also enable the Bank to be more competitive and meet the funding needs of its blue chip customers that meet its credit risk criteria.

The funds raised would provide Access Bank with additional capacity to further consolidate its leading corporate banking business as well as additional capital headroom to support our increasing market share in the SME and retail segments,” he said.

– This Day

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