Fidelity Bank Plc has begun preparing to take on oversubscriptions in light of the overwhelming support and enthusiasm for the bank’s current offerings. Market analysts had predicted that the bank would raise more money than the initial amount of the combined offer, as investors had flocked to support its N127.1 billion combined rights and public offer.
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Early in the offer period, reports have shown high subscription levels, driven by demand from the general investing public as well as acceptances by current shareholders.
A rights issue of 3.2 billion ordinary shares, each worth 50 kobo, is being offered by Fidelity Bank for N9.25 per share. The general investing public is being offered 10 billion ordinary shares by the bank at a price of N9.75 per share, with each share valued at 50 kobo. The public offer and rights issue acceptance and application lists commenced on Thursday, June 20, 2024, and will close on Monday, July 29, 2024. One new ordinary share for every ten existing ordinary shares owned as of Friday, January 5, 2024, at the close of business, is how the rights issue has been pre-allotted.
Receiving agents have provided positive comments, and as long as experts, shareholders, and other stakeholders continue to give the combined bids high ratings, the board of Fidelity Bank has called an extraordinary general meeting (EGM) to enable the bank to absorb expected surplus funds.
The company wants to accept surplus funds from the potential oversubscription of the combined offer, “in such proportion as may be determined by the board of directors, subject to the company’s issued share capital and obtaining relevant regulatory approvals.” To that end, shareholders are planning to meet later this month to give their approval. In order to “accommodate potential oversubscription of the combined offer in the proportion of 5.0 billion additional ordinary shares under the public offer and 3.2 billion additional ordinary shares under the rights issue,” shareholders are also expected to increase the company’s issued share capital from N22.6 billion, divided into 45.2 billion ordinary shares of 50 Kobo each, to N26.70 billion through the creation of up to 8.2 billion. The board will also be mandated by the meeting to take all necessary actions in line with the absorption of the oversubscription funds.
The bank’s board reaffirmed its commitment to upholding the bank’s international banking license by meeting the new capital requirement within the regulatory timeframe. The board stated that the resolutions to be approved by shareholders at the upcoming EGM on July 26, 2024, are intended to allow for the acceptance of any potential oversubscription from the combined offer, subject to the necessary regulatory approvals. The bank will be better positioned to capitalize on new business opportunities, secure long-term profitability and competitive advantage, and ensure increased shareholder value with the resolutions to accept oversubscription.
Investments in company and regional expansion, product distribution networks, and information technology infrastructure would be made using the offer’s net proceeds. “The company is growing at a rapid pace and needs more funding to increase its profitability, expand both locally and internationally, and strengthen its digital skills. According to the board, “the bank must continue to be flexible, agile, and well-positioned to respond appropriately to developments, while remaining a competitive and forward-looking institution. These factors, along with the rapid evolution of the banking industry, also make this imperative.”
The bank’s directors gave their word that Fidelity Bank would grow steadily and sustainably, even with the banking sector’s ongoing rapid evolution. The combined N127.1 billion rights and public offer of Fidelity Bank Plc had seen early success as eager shareholders mobilized to select their pre-allotted shares and purchase additional stakes in the most popularly owned commercial bank in Nigeria. In a huge show of support and positioning within the bank, shareholders have declared that they will exercise their entitlement to purchase additional shares from the public offer. Over the previous five years, Fidelity Bank has generated an average yearly capital gain of over 100% and is considered one of the elite firms on the Nigerian stock market with the highest corporate governance rating.
In separate interviews, shareholders from the top shareholders’ associations in Nigeria stated that the bank’s operational progress over the years, dividend history, capital gains, and the pricing of the substantially discounted rights issue and public offer all drew them in to purchasing larger interests. One of the rare businesses that distributes dividends to stock market investors twice a year is Fidelity Bank. Their aim was that Fidelity Bank, after recapitalization, would yield greater returns and maintain its position as a foremost guardian of shareholder wealth. Speaking through their leaders, the shareholders stated that recapitalization has provided a favorable opportunity for the investing public to purchase high-quality banking equities at discounted prices, pointing out that banks hold the largest market share in Nigeria, primary market issues are exempted from paying transaction costs, unlike direct purchase through the secondary market.
Under the aegis of several organizations, including the Progressive Shareholders Association of Nigeria, the Independent Shareholders Association of Nigeria (ISAN), the Ibadan Zone Shareholders Association (IBZA), the Association for the Advancement of Rights of Nigerian Shareholders (AARNS), and the Pragmatic Shareholders Association of Nigeria, shareholders declared that they were advocating for the bank and asserting their rights. With the most diverse retail shareholder base among Nigerian banks, Fidelity Bank is greatly bolstered by the endorsements of its general shareholders. With almost 400,000 stockholders, no single owner possessed more than 5.0% of the bank’s issued share capital. According to current legislation and market regulations, a stake of five percent or more is considered material.
The success of a rights issue typically depends heavily on the happiness and zeal of the current owners. Traditionally, rights issues are pre-allotted based on existing shareholdings. With a very diverse group of shareholders, Fidelity Bank looks to be riding high and enjoying widespread support from all categories of investors. Following similarly encouraging remarks from capital market participants and investment professionals, the shareholders made their opinions. The public’s enthusiastic support for the combined rights and public offers came from important capital market participants who remembered the symbolic significance of Fidelity Bank’s remarkable development and investor-friendly attitude over the years.
The N127.1 billion combined rights and public offer received unqualified recommendations from the Nigerian Exchange (NGX), stockbrokers, investors, and customers. Industry thought leaders cited Fidelity Bank’s performance in both its core banking operations and as a quoted company at the stock market. They claimed that the nation’s banking recapitalization exercise should have begun with Fidelity Bank’s N127.1 billion combined rights and public offer because the bank, which has the highest corporate governance rating and an average annual capital gain of more than 100% at the stock market, has strong appeal to the investing public. Alhaji Rasheed Yussuff, the Doyen of Stockbrokers and the oldest stockbroker still in business, stated that Fidelity Bank has a strong track record thanks to its history of impressive growth and profitability and dividend payments.
