Fidelity Bank Plc will today open application lists for its N127.2 billion combined rights and public offer, in the first capital raising under the banking recapitalisation exercise mandated by the Central Bank of Nigeria (CBN).
Fidelity Bank is offering a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The bank is also simultaneously offering 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.
The acceptance and application lists for the rights issue and public offer, which open today, are scheduled to close on Monday, July 29, 2024.
The rights issue has been pre-allotted on the basis of one new ordinary share for every 10 existing ordinary shares held as at the close of business on Friday, January 05, 2024.
The combined offer is a part of the bank’s strategy to increase its share capital base in compliance with the revised minimum capital requirements for Nigerian commercial banks introduced by the CBN on March 28, 2024.
The bank expects that the additional equity capital to support its efforts to drive sustained growth and diversification of earnings base.
The bank’s shareholders had already approved the rights issue and public offer at the extra-ordinary general meeting held in August 2023.
Managing Director, Fidelity Bank Plc, Dr. Nneka Onyeali-Ikpe, said the net proceeds of the combined offer would be applied towards investment in information technology infrastructure, business and regional expansion, and investment in product distribution channels.
With more than 397,000 shareholders, Fidelity Bank’s shares are widely held with no shareholder holding five per cent or more of the bank’s issued share capital.
The bank has history of successful capital raising. It had in 2013 raised $300 million in its inaugural Eurobond. It followed this with a N30 billion unsecured domestic corporate bond in 2015. In 2017, Fidelity Bank issued another Eurobond, raising $400 million. Under a 10-year Tier II domestic corporate bond, the bank raised N41.2 billion in 2021 and also another $400 million Eurobond same year. The bank successfully raised N13.97 billion in new equity funds through a private placement.
Stanbic IBTC Capital is the lead issuing house to the combined offer. The joint issuing houses include Iron Global Markets Limited, Cowry Asset Management Limited, Afrinvest Capital Limited, FSL Securities Limited, Futureview Financial Services Limited, Iroko Capital Market Advisory Limited, Kairos Capital Limited and Planet Capital Limited.
A recent review had shown that Fidelity Bank outperformed all major market indices for measuring returns at the Nigerian stock market, with the bank’s average annual return over the past five years twice the average return by the overall market and almost four times of average return in the banking sector.
A review of official trading reports at the Nigerian stock market showed that investors in Fidelity Bank have earned more than 507 per cent in capital gains over the past five years, between May 31, 2019 and May 31, 2024
Fidelity Bank’s share price rose by 507.14 per cent over the period, representing average annual capital gain of 101.43 per cent. This significantly exceeds all other major return benchmarks, including the banking sector.
With 507 per cent capital gain in five years and average annual gain of more than 100 per cent, the return analysis implies that investment in Fidelity Bank is more attractive than other class of assets, including fixed-income securities such as government and corporate bonds; real estate investment and mutual funds among others.
These returns underscore Fidelity Bank’s immense value as a stock for all times, helping investors to hedge against inflation while preserving significant long-term value.
The high divisible nature of shares investment and high free float of Fidelity Bank, which makes the bank’s shares easily available, underline the bank as a most attractive investment option for all cadres of investors- small, medium and high networth; retail and institutional investors.
The All Share Index (ASI) – the common, value-based index that tracks all share prices at the Nigerian Exchange (NGX), which is widely regarded as Nigeria’s benchmark for equities market, recorded a five-year return of 219.61 per cent, an average annual return of 43.9 per cent.
Contrary to the significantly above average performance of Fidelity Bank, the NGX Banking Index-which tracks the banking sector, doubled by 120.53 per cent over the five-year period, representing average annual return of 24.11 per cent, more than 77 percentage points below Fidelity Bank’s average return.
Two other major price indices- the NGX 30 Index and NGX Main Board Index, recorded five-year cumulative return of 185.73 per cent and 265.6 per cent respectively, representing average annual gain of 37.15 per cent and 53.1 per cent respectively.
The NGX 30 Index tracks share prices of the 30 largest companies at the stock market while the NGX Main Board Index represents the largest and most diversified group of listed companies at the stock exchange. Fidelity Bank is quoted on the main board, like most other major banks and companies at the stock market.
The average annual return of 101.43 per cent underlines that Fidelity Bank provides substantial return for investors, even where such investors had borrowed money at the ruling interest rate and the invested fund was adjusted for impact of inflation rate.