Rights issue: 8 companies list N155.7bn in 2015

Eight listed companies on the equities market of the Nigerian Stock Exchange (NSE) access N155.7 billion fresh capital in 2015 to boost their business expansion and capital adequacy needed to support real sector of the economy.

Market analysts attributed the slow rights issue in recent years to weak exposure of foreign investors’ participation as the build-up to the general elections and dwindling oil prices had impacted on largest African economy with Gross Domestic Product (GDP) of $568.5 billion.

Financial Institutions with the likes of Diamond Bank Plc, Access Bank and United Bank for Africa (UBA) Plc listed a total sum of N103.6 billion that represents 66.5 per cent of the N155.7 billion capital accessed by eight companies via rights issue.

Rights Issue remains an avenue through which existing shareholders purchase additional new shares in a company and at a discount to the current market price. This simply gives the shareholders the opportunity to increase their stake in company.

Diamond Bank had listed N50.4 billion, while Access Bank and UBA listed N41.7 billion and N11.5 billion respectively.

Access Bank had explained that the rights issue placed investors firmly at the centre of its strategy, ensuring sustainable dividends through one of the strongest capital buffers as well as providing the means for further investment to exploit target markets.

 The Group Managing Director, Access Bank, Mr. Herbert Wigwe, was quoted as saying that the issue was part of steps to strengthen the bank.

He said, “We are putting in place the building blocks for our future as we work to becoming a top three bank in Nigeria by 2017. The capital raised will allow us to retain our place among Nigeria’s best-capitalised banks and underscores our continued commitment to prudent risk management as we seek growth opportunities both in Nigeria and abroad.”

With this additional equity, UBA has fortified its capital base ahead of the full implementation of BASEL II, which requires higher capital buffer for Banks, to accommodate credit, operational and market risks inherent in the business of financial intermediation.

Speaking on the Rights Issue, the GMD/CEO of UBA Plc, Mr. Phillips Oduoza said; “I am pleased with the successful completion of this Rights Issue, as it provides further leverage to exploit our growth potentials.

On behalf of the Management of UBA, I appreciate the shareholders for their strong commitment towards the growth of our dear Bank and for the unwavering confidence reposed in us in building a great Pan-African institution. We will remain true to our promise of delivering superior and sustainable return to all stakeholders over the near to long term, just as we are committed to the development of the African economies where we operate.”

From the Oil and Gas sector, Oando Plc listed N48.7 billion after shareholders of the company requested for an extension of the acceptance period as a result of the delay in receipt of their rights issue circulars as a result of the skeletal postal service during the 2014 end of year festivities.

Group Chief Executive, Oando Plc, Mr. Wale Tinubu,  was quoted in a statement that, “We have launched our Rights Issue towards re-vitalizing our balance sheet in preparation for the landscape of growth opportunities in 2015, to ensure we maximize value and cash returns to our shareholders.”

Evans Medical Plc and Pharma Deko Plc, two listed pharmaceuticals companies accessed N560.69 million and N210.3 million respectively.

Further details revealed that Prestige Assurance Plc listed N1.5 billion while Sovereign Trust Insurance Plc listed N1.14 billion.