Afribank Set to Hit the Market with Share Offer
Acceler8now.com, 25 October, 2007
The much-expected share offer of Afribank Plc, one of Nigeria's oldest banks, looks set to hit the market shortly. The bank held the completion board meeting for the offer yesterday, 24th October, 2007, leaving all ready for the share offer.
Afribank plans to raise a gross sum of N100 billion through the offer which opens Wednesday, November 1st, 2007 and closes Monday, December 10th, 2007. That is expected to come through four billion ordinary shares of 50 kobo each, going at N25 per share, in an offer for subscription. With 13 issuing houses backing the offer and underwriting it to the tune of 80%, prospective investors can look forward to a successful offer. Some of the institutions backing the offer as joint issuing houses are: Union Capital Markets Limited, co-leading with Afribank Capital Markets Limited, Falcon Securities, FBN Capital, FSDH Securities Limited, IBTC Chartered Bank, Fidelity Finance Company Limited, Lead Capital, Greenwich Trust Limited, Profund Securities Limited, Spring Capital, Tiddo Securities Limited and Northbridge Investment Trust Limited.
Funds to be raised from the offer are targeted at these key business objectives:
- Boosting branch presence, through expansion and upgrades, to deepen retail infrastructure;
- Strengthening subsidiaries' capital base for better operational capacity and business growth;
- Increased ATM rollout;
- ICT upgrade to meet strategic business development objectives;
- Expanding ebanking delivery channels;
- Boosting working capital to meet expanded operations.
The bank's management is upbeat about the offer and is not perturbed by the presence of multiple offers currently running in the market. "Afribank has its niche and its loyal customers who will be ready to invest in the offer", said the bank's Managing Director, Sebastine Adigwe. Besides, he is of the view that at the offer price of N25 per share, the offer is a give-away.
Afribank is one of the banks whose operation has endured in the Nigerian market. Starting off way back in 1959 as Banque International Pour L'Afrique Occidenate (BIAO), it later became International Bank for West Africa (IBWA) and, finally, in 1990, Afribank. It's an undisputed fact that Afribank was once one of the four top banks in Nigeria. What is also clear is that the bank has continued to show resilience, and, even though it lost grounds to more aggressive younger banks, its current management looks determined to reposition it to rank with peer banks. The current offer may just provide the fillip.
Recent performance results point to that rejuvenation. For the financial year ended March 31st, 2007, group gross earnings was grown by 76% from N15.60 billion to N27.50 billion, a decent growth by any standard. Profit Before Exceptional Items and Tax was even a better showing, surging 129% from N3.98 billion in 2006 to N9.13 billion. Fairly strong growth was also recorded in total deposits base: 54.82% growth from N91.89billion in 2006 to N142.27billion in 2007. The bank currently has over 250 branch outlets, spread across Nigeria.
Afribank was in the capital market late 2004 to raise capital to meet the bank recapitalisation requirement then imposed on Nigerian banks to achieve a minimum capital base of N25 billion. It was one of the 25 banks out of some 89, which met that requirement and stayed in operation. Its share offer then was at N6.80, leaving investors in that offer with a handsome capital appreciation by today, especially if you factor in the bonus issues already given.
The Nigerian capital market has been abuzz with new share issues in recent months, with a substantial part of the offers coming from the banking sector. No doubt, that sector has seen tremendous growth since that heady policy initiative to dramatically raise their minimum share capital, which has turned out a big blessing. Many of them have since seen the benefit of better funding and have gone ahead to pursue new capital targets by choice. The Nigerian Central Bank governor, Professor Chukwuma C. Soludo, has just been reported to have projected that at least 15 Nigerian banks will hit a capital base of over $2 billion, by year end.
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