In response to the Central Bank of Nigeria’s fresh recapitalisation mandate, Zenith Bank Plc has finalized plans to raise approximately N290bn in fresh capital, surpassing the required N230bn.
The announcement of the capital raise was made during the bank’s rights issue/public offer signing ceremony held in Lagos on Monday, as stated in a release from Zenith Bank.
The capital raise will involve a combination of a rights issue and a public offer, with the rights issue offering 5,232,748,964 ordinary shares at N36.00 per share and the public offer presenting 2,767,251,036 ordinary shares at N36.50 per share to new investors.
Existing shareholders are given the opportunity to purchase additional shares through the rights issue, based on one new ordinary share for every six existing ordinary shares held as of Wednesday, July 24, 2024.
On the other hand, the public offer is open to the general public in a bid to attract new investors.
Dr. Adaora Umeoji, the Group Managing Director/Chief Executive Officer of Zenith Bank Plc, expressed satisfaction with the reception of the Rights Issue among existing shareholders and emphasized the importance of including a public offer to broaden ownership to customers who are not yet shareholders.
Zenith Bank’s strong capital position was highlighted, being recognized as the top bank in Nigeria for tier-1 capital, as mentioned by The Banker, Financial Times. The bank’s consistent track record of rewarding shareholders, including maintaining the highest dividend payout in Nigeria for the past five years, was also noted. In 2023, Zenith Bank made history as the sole Nigerian bank to pay a dividend of N4 per share.
The capital raised will be utilized for expanding banking operations across Africa and internationally, investing in technology infrastructure, and supporting ongoing working capital needs.
Mr. Oladele Sotubo, the Chief Executive of Stanbic IBTC Capital Limited, commended Zenith Bank’s management for its commitment to the transaction and the opportunity provided for shareholders and new investors to be part of the bank’s future journey.
He also expressed appreciation for Stanbic IBTC Capital Limited’s role in leading and guiding the execution of the transactions.
The combined rights issue and public offer reflect Zenith Bank’s leadership in the market and its potential to inspire more capital market transactions, as remarked by Mr. Sotubo.
The lead issuing house for the rights issue and public offer is Stanbic IBTC Capital Limited, supported by joint issuing houses including Quantum Zenith Capital & Investments Limited, CardinalStone Partners Limited, Meristem Capital Limited, Chapel Hill Denham Advisory Limited, Coronation Merchant Bank Limited, and Vetiva Advisory Services Limited.
The offer is set to commence on Thursday, August 1, 2024, and will conclude on Monday, September 9, 2024.
The Central Bank of Nigeria’s directive for Deposit Money Banks to recapitalize was issued in late March. According to the CBN recapitalization circular, commercial banks with international authorization are required to raise their capital base to N500bn, while national banks should reach N200bn, and regional banks a N50bn capital floor. Non-interest banks with national and regional authorizations will also need to increase their capital to N20bn and N10bn, respectively.
In this round of recapitalization, only the share capital and share premium items on the Shareholder Fund portion of the balance sheet will be considered, as outlined in the CBN circular. Banks have a 24-month period from April 1, 2024, to March 31, 2026, to meet the minimum capital requirement through additional capital raising, mergers and acquisitions, or license changes.