INVESTORS are scrambling for shares of Fidelity Bank Plc and that of Zenith Bank as the leading commercial banks capital raising continues to gather momentum among all categories of market participants.

Specifically, analysts observed that existing shareholders and new investors who partake in the ongoing hybrid rights and public offerings of Zenith Bank will gain about 32 percent in immediate return.

Zenith Bank Plc, in a move to meet the new minimum capital requirement of N500 billion by the Central Bank of Nigeria (CBN), is offering a hybrid rights issue and public offer to raise approximately N290 billion to meet the CBN’s requirement and also provide additional working capital to support its expanding operations and investments in information technology infrastructure. Zenith Bank’s issued and fully paid share capital currently stands at N15.698 billion, complemented by a share premium of N255.047 billion. To meet the CBN’s new stipulation, the bank requires an additional N229.225 billion. Despite its robust historical performance, the CBN’s new capital requirement has necessitated this substantial capital raise.l

Adaora Umeoji, the Group Managing Director of Zenith Bank, said this capital infusion will help meet regulatory requirements and enhance the bank’s information technology infrastructure.

The Hybrid offer includes a Rights Issue of 5.233 billion ordinary shares priced at N36 per share for existing shareholders, alongside a Public Offer of 2.767 billion ordinary shares available to the public at N36.50 each. The offer commenced on August 1, 2024, and is set to close on September 9, 2024.

The shares were pre-allotted to existing shareholders based on one new ordinary share for every six existing ordinary shares held as of the close of business on Wednesday, July 24, 2024.

In a similar development, Investors’ appetite for Fidelity Bank is shown in massive subscriptions to its ongoing rights and public offers and voluminous trading at the stock market.

The current weekly report shows that Fidelity Bank was the most active stock in the stock market, outperforming the banking sector and the overall market.

Fidelity Bank recorded a turnover of 1.73 billion shares worth N18.27 billion in 1,579 deals to emerge atop the activities chart for the week. This implies that the Bank accounted for 51 percent and 35 percent of total volume and value traded during the week. Total turnover for the week at the Nigerian Exchange (NGX) stood at 3.39 billion shares worth N52.30 billion in 44,814 deals.

The combination of huge turnover and appreciation of the share price underlined that positive investors’ sentiments drive transactions in Fidelity Bank.

Contrary to the overall negative performance of the market and the banking sector, Fidelity Bank’s share price rose by 0.05 percent to N10.75 per share. The benchmark index that measures pricing trends for the equities market, the All Share Index (ASI) of the NGX, closed the week down by 0.46 percent. The NGX Banking Index, the sectoral index that measures the performance of the banking sector, closed lower by 0.48 percent.

The secondary market trading on Fidelity Bank’s shares underscored investment experts’ general view on the attraction of the bank’s ongoing rights and public offers. Experts have categorised Fidelity Bank as the most attractive offer, with the bank carrying the “buy” recommendation in most investment research reports.

For instance, at the ongoing offer prices, the lender is locking in an immediate double-digit gain of 11 to 18 percent for investors in the ongoing rights and public offers, a substantial immediate return that’s unique to the bank among other competitors.

Fidelity Bank had started with a N127.1 billion hybrid offer including a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share and a public offer of 10 billion ordinary shares of 50 kobo each at N9.75 per share.

With massive subscriptions and the offers heading to huge oversubscription, the bank has received approvals to issue an additional 8.2 billion ordinary shares to absorb potential oversubscription. Thus, the rights issue size was doubled with additional 3.2 billion shares while 5.0 billion shares were added to the public offer.

The application list for the offers closes on August 12, 2024. A minimum subscription of 1,000 shares or N9,250 for the rights issue and N9,750 shares for public offers ensures that the generality of the people can benefit from the bank’s ongoing offers.

Experts at Afrinvest West Africa Limited said subscribing to the rights and public offers is a cheaper way as the issuing company bears the cost of the transaction as against to the secondary market where the buyer pays transaction charges and levies.

Afrinvest categorised Fidelity Bank as an “opportunity” for the investing public, citing the bank’s impressive historical capital gain and performance records.

Investment experts at Arthur Steven Asset Management said investors in Fidelity Bank’s ongoing rights and public offers stand to reap about 57 percent in capital gain over a short-term period, putting the bank’s shares as valuable inflation-hedging assets.

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