On Thursday, June 20, Fidelity Bank Plc, Nigeria’s sixth-largest bank, will open its public offer and rights issue, aiming to raise up to N127.1 billion. This Combined Offer comprises a Rights Issue to existing shareholders and a Public Offer to the general investing public.
Under the Rights Issue, 3.2 billion ordinary shares of 50 kobo each will be offered at N9.25 per share in a ratio of 1 new share for every 10 ordinary shares held as of January 5, 2024. Meanwhile, the Public Offer will see 10 billion ordinary shares of 50 kobo each available at N9.75 per share. The acceptance and application period for both will run from June 20 to July 29, 2024.
This capital-raising initiative is part of Fidelity Bank’s strategy to meet the revised minimum capital requirements for Nigerian commercial banks, introduced by the Central Bank of Nigeria (CBN) on March 28, 2024. Stanbic IBTC Capital is the Lead Issuing House for the offer, with support from several Joint Issuing Houses including Iron Global Markets Limited, Cowry Asset Management Limited, and Afrinvest Capital Limited.
Strategic Utilization of Raised Capital
Fidelity Bank plans to use the proceeds from the Combined Offer to invest in IT infrastructure, expand business operations regionally, and enhance product distribution channels. These initiatives are designed to support sustained growth and diversify the bank’s earnings base.
Managing Director and CEO of Fidelity Bank, Nneka Onyeali-Ikpe, highlighted the bank’s commitment to delivering superior returns to shareholders and expanding its operational capabilities. She stated, “The proceeds will be applied towards investment in IT infrastructure, business and regional expansion, and investment in product distribution channels.”
Market Performance and Investor Confidence
Fidelity Bank’s share price has seen significant growth, rising from N1.68 per share on May 31, 2019, to N10.20 per share by the end of May 2024. This growth reflects the bank’s strong performance and investor confidence. The All-Share Index (ASI) and other key indices of the Nigerian Exchange (NGX) have also shown substantial increases, highlighting a robust market environment.
The positive market sentiment is echoed by analysts who believe Fidelity Bank’s share price could continue to rise, driven by its strategic initiatives and solid financial performance. David Adonri, Managing Director of HighCap Securities Limited, emphasized that the market value of a stock is a true reflection of its value. Similarly, Aruna Kebira, Managing Director of Globalview Capital Limited, noted that market sentiment plays a crucial role in determining stock prices.
Recognition and Future Prospects
Fidelity Bank has been recognized by various independent investment research reports, receiving a “BUY” ticker recommendation. Reports from Afrinvest Group, FSDH Capital, and CardinalStone highlight the bank’s operational excellence, strategic growth plans, and robust management.
The bank’s recent acquisition of Union Bank UK, supported by a $40 million facility from the African Export-Import Bank (Afreximbank), is a testament to its ambitious international expansion strategy. This move positions Fidelity Bank as a pan-African financial institution capable of providing comprehensive banking services to a broader market.
Financial Performance
In its 2023 full-year audited financial statements, Fidelity Bank reported a 131.5% growth in Profit Before Tax (PBT) to N124.26 billion, with gross earnings increasing by 64.9% year-on-year to N555.83 billion. These impressive results underscore the bank’s ability to generate substantial returns despite challenging operating conditions.
Fidelity Bank has consistently paid dividends since 2006, with a significant increase in dividend payouts in 2023. The bank’s commitment to shareholder value creation is evident in its robust financial performance and strategic growth initiatives.
As Fidelity Bank opens its public offer and rights issue, it stands poised to strengthen its capital base, support growth, and enhance its market position, reaffirming its role as a leading player in Nigeria’s banking sector.
“We recognise the changing dynamics in the Nigerian banking space and the need to monitor and proactively manage evolving risks. The proposed final dividend of 60 kobo per share reflects our commitment to strong value creation and returns to our shareholders,” Onyeali-Ikpe had said ahead of the dividend payment.
Meanwhile, Fidelity Bank’s Initial Public Offer (IPO), is anticipated to be oversubscribed, according to Nneka Onyeali-Ikpe, managing director/CEO, in an interview with journalists.
Onyeali-Ikpe expressed confidence due to the significant interest already shown by investors.
“The IPO is launching on Thursday, June 20, 2024, and we aim to raise N125 billion. Given the current interest levels, we are very confident it will be oversubscribed,” Onyeali-Ikpe stated during the closing day of Afreximbank’s 2024 annual meetings, which also covered Afri-Caribbean trade and investment in Nassau, The Bahamas.
