Fidelity plans to raise new equity funds through the issuance of about 3.04 billion ordinary shares of 50 kobo each to select investors.
Fidelity Bank will undertake a private placement to issue its unissued authorised share capital to carefully identified private investors in a transaction that may add some N10 billion new equity funds to the bank.
Fidelity Bank’s share price closed at the weekend at N3.65 per share, days after it announced the receipt of Central Bank of Nigeria (CBN)’s preliminary approval to acquire 100 per cent equity stake in Union Bank UK Plc, a spin-off and former subsidiary of Union Bank of Nigeria (UBN) Plc.
The Board of Directors of Fidelity Bank has scheduled an extraordinary general meeting of shareholders by the end of this month to consider and approve the 3.04 billion shares private placement.
Under the resolutions, shareholders are expected to waive their pre-emptive rights to the unissued shares to be allocated to select private investors and to approve that such issued shares to private investors shall rank in all respect equally with the existing ordinary shares of the bank.
Shareholders are expected to pass five sub-joined special resolutions mandating the issuance of the new shares in compliance with extant laws and rules guiding corporate and capital market’s transactions.
The Board of the bank indicated that the it was adopting the proposed private placement option to comply with provisions of Section 124 of the Companies and Allied Matters Act, 2020 and the Companies Regulations 2021, and pursuant to Paragraphs 9 and 10 of the Articles of Association of the company.
Recent changes in corporate laws disallow keeping subsisting unissued shares, leaving companies with the option of cancelling current unissued authorised share capital or issuing out such shares.
Directors of Fidelity Bank indicated that the new private placement shall not be more than 30 per cent of the company’s existing issued shares and paid up capital, outlining the potential share dilution impact of the proposed new offer.
Fidelity Bank had two weeks ago announced that it had entered into a binding agreement to acquire 100 per cent in Union Bank UK Plc, a transaction that will make the London-based retail and wholesale banker a wholly-owned subsidiary of Fidelity Bank. The transaction is, however, still subject to the approval of the UK’s Prudential Regulatory Authority (PRA).
Managing Director, Fidelity Bank Plc, Mrs. Nneka Onyeali-Ikpe has said the acquisition aligned with the bank’s strategic plan of expanding its service touchpoints beyond the Nigerian market as well as providing straight-through services that meet and exceed the needs of its growing clients.
“The diverse service bouquet and business model of Union Bank UK offered a compelling strategy and we hope to build on the capacity to create a scalable and more sustaining service franchise that will support the wider ecosystem of our trade businesses and diaspora banking services,” Mrs Onyeali-Ikpe said.
Union Bank UK commenced operations in London in 1983. Its banking services include personal banking, trade finance, treasury management and structured trade and commodity finance.
Key extracts of the audited report and accounts of Fidelity Bank for the six-month period ended June 30 2022 showed that gross earnings rose by 37.9 per cent from N112.30 billion in first half 2021 to N154.84 billion in first half 2022. Profit before tax grew by 21.6 per cent to N25.08 billion in first half 2022 as against N20.6 billion in first half 2021. After taxes; net profit rose by 20.7 per cent from N19.31 billion to N23.31 billion. Earnings per share thus stood at 80 kobo in first half 2022 as against 67 kobo in first half 2021. The board of the bank has declared an interim dividend of 10 kobo per share to all shareholders on the register of the bank as at the close of business today with the interim cash dividends payable on September 20 2022.
