Stockbrokers Report Surge In Investors’ Interest For Bank Rights Issues, Public Offers

Stockbrokers in the Nigerian capital market are observing a remarkable surge in investors’ interest regarding the ongoing public offerings and rights issues by major banks.

This heightened engagement comes as Nigerian banks seek to bolster their capital reserves in response to the Central Bank of Nigeria’s (CBN) new minimum capital requirements. These regulatory measures are designed to strengthen the financial system and enhance the banks’ ability to support economic growth.

Several prominent banks have recently initiated capital-raising initiatives. Guaranty Trust Holding Company Plc (GTCO) has launched a public offer for 9 billion ordinary shares priced at 50 kobo each, with a total target of N400.5 billion. Access Holdings Plc is conducting a rights issue aimed at raising N351 billion through the sale of 17.772 billion ordinary shares at N19.75 per share. Fidelity Bank Plc has also entered the fray with a public offer of 10 billion ordinary shares priced at N9.75 per share, alongside a rights issue of 3.2 billion shares at N9.25 per share, targeting N127.10 billion.

Despite the scale of these offers, comprehensive data on subscription levels is still pending, as banks continue their vigorous promotional efforts. Stockbrokers interviewed reported that there are encouraging level of investor engagement.

Mr. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited and former President of the Chartered Institute of Stockbrokers (CIS), noted a significant increase in interest and inquiries from retail investors. He expressed optimism that many of these offers would be fully subscribed or even oversubscribed, attributing this to the widespread public awareness and active participation in the investment opportunities presented by the banks.

However, Mr. Amolegbe cautioned that it remains too early to make definitive predictions about the final subscription levels. Many of the current offers still have several weeks remaining, and the true extent of investor participation will only become clear once the subscription periods close. He stressed the role of stockbrokers in providing crucial investment advice and ensuring that investors are well-informed.

Similarly, Mr. David Adonri, Executive Vice Chairman of Hicap Securities Limited, observed positive signs of investor participation. He noted that while the current response appears strong, it is essential to wait until the offerings conclude to make accurate assessments of subscription levels. Mr. Adonri’s comments reflect a cautious optimism within the financial community, highlighting the need for continued monitoring of the market dynamics.

Mr. Victor Chiazor, Analyst and Head of Research at FSL Securities Limited, also noted the difficulty in gauging investor participation before the end of the subscription period. He pointed out that the decentralised nature of access to these offers through various stockbroking firms makes it challenging to assess overall investor response prematurely. Mr. Chiazor highlighted that a comprehensive view of investor engagement will only emerge once the subscription period ends and data from various stockbrokers is consolidated.

The significant investor interest in the current bank public offerings and rights issues reflects a positive sentiment in the market. The proactive efforts by banks and stockbrokers to engage with investors highlight the importance of effective communication and investor education in capital market activities. The final impact on subscription levels will become clearer once the subscription periods conclude, providing valuable insights into investor confidence and market dynamics.