Shareholders who invested in the combined N1.27 trillion shares sold by top five banking giants in Nigeria are currently in limbo due to the delay in the allocation of their shares, Daily Trust reports.
Zenith Bank Plc, FCMB Group Plc, Fidelity Bank Plc, Guaranty Trust Holding Company Plc (GTCO) and Access Holdings Plc took part, separately, in the capital-raising activities in a bid to meet the Central Bank of Nigeria’s (CBN) recapitalisation exercise deadline.
However, about two months after the completion of their offers, investors have not been allocated their shares.
Our correspondent reports that Fidelity Bank had opened its public offer and Rights Issue on Thursday June 20.
The bank was at the stock market to raise a capital of up to N127.1billion by way of a Rights Issue to existing shareholders and a Public Offer (the Combined Offer).
The Bank later extended its N127.01 billion public offering and rights issue by two weeks after receiving the approval of Securities and Exchange Commission (SEC) to extend the closing date of the application and acceptance lists till August 12, 2024.
Also, GTCO completed its N400.5 billion public offer on August 12, while the Access Holdings rights issue of N351.01 billion ended on August 23, 2024 after extending the offer by one week.
On its part, Zenith Bank extended its public/ right issues for one week and ended the process on September 23, 2024. FCMB Group’s N110.9 billion public offer also ended September 4, 2024.
As of today, none of the banks has allocated shares to the investors.
Experts in the industry told Daily Trust that delay in the allotment of shares is caused by the CBN’s verification process.
“It’s not something that takes overnight,” Ayokunle Olubunmi, a financial analyst, told our correspondent in a telephone interview.
Olubunmi, who is the Head of Financial Institutions Ratings at Agusto and Co, said the apex bank has a duty to verify sources of the funds in order not to inject criminal proceeds into the system.
He said “For those that are doing it for the first time, they will be worried but for those that have been investing they will understand. I even know a bank last year that did a right issue, it took them almost nine months before they got the approval of CBN, perhaps CBN was asking for documentation. Particularly with a huge amount of money, CBN wants to investigate the source of funds.
“With what we have known in Nigeria, worst case scenario, if you are not allocated the shares, your funds will be returned back to you. These are reputable institutions and reputable banks.”
The National Coordinator Independent Shareholders Association Of Nigeria (ISAN), Moses Igbrude, also blamed the delay on the verification process of the CBN, while admitting that the process has taken “too long.”
He, however, asked investors to be patient.
“It’s a new innovation. We have no option than to wait for the CBN or even the CBN to speak out so that at the end of the day people will understand what is going on.
“The information we heard is that the CBN is verifying sources of funds whether it is coming from money laundering and all of that. So, that verification takes time,” Igbrude told Daily Trust.
Asked if the delay could also be related to oversubscription, Olubunmi said it has not thing to do with oversubscription.
“There is a maximum amount of what you can pick and I recall two or three banks extended the transactions and got the approval of SEC to increase the size of what they are offering to the public. So, most of them have done their homework and gotten the approval,” he said.
Meanwhile, the Director General of SEC, Dr. Emomotimi Agama, said the law allows banks to absorb 15 percent of the oversubscription of the offers from the banks.
“15 percent of the oversubscribed portion is allowed to be absorbed by the company. However, as a commission, we are very amenable to opportunities that exist and so, it is not cast in stone.
“If we discover that the oversubscription is beyond 15 percent and there is a good reason for absorption, we will take each company’s case by case so that people will know what exactly they are doing.
The laws are there and we must obey the law. But fundamentally, the rule says take 15 percent of oversubscription,” Agama said while responding to questions from newsmen recently in Lagos.
