Recapitalisation: Investors Scramble for Fidelity Bank’s Offers

Investors are literally scrambling for shares of Fidelity Bank Plc as the leading commercial bank’s capital raising continues to gather momentum among all categories of investors.

Investors’ appetite for Fidelity Bank is shown in massive subscriptions to its on-going rights and public offers and voluminous trading at the stock market.

Current weekly report shows that Fidelity Bank was the most active stock at 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 Fidelity Bank accounted for 51 per cent and 35 per cent 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.

In what underlined the fact that transactions in Fidelity Bank was driven by positive investors’ sentiment, the bank’s share price combined the huge turnover with appreciation.

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

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 a most attractive offer, with the bank carrying the “buy” recommendation in most investment research reports.

For instance, at the on-going offer prices, Fidelity Bank is locking in immediate double-digit gain of between 11 to 18 per cent for investors in the on-going 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 clearly heading to huge over-subscription, the bank has received approvals to issue 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.

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

Experts at Afrinvest West Africa said subscribing to the rights and public offers is a cheaper way as the issuing company bears the cost of transaction compared 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 per cent in capital gain over a shor- term period, putting the bank’s shares as valuable inflation-hedging assets.

Analysts at Arthur Steven Asset Management outlined that with a return on equity of 23 per cent, Fidelity Bank has consistently increased dividend payouts for the past three years, rising from 35 kobo per share in 2021 to 40 kobo and 60 kobo in 2022 and 2023 respectively.

Analysts noted that the bank has a long-to-deposit ratio of 75 per cent, which underlines Fidelity Bank’s strong commitment to supporting businesses and national economic development. Debt-to-equity ratio stands at 1.34 times, showing that the bank has no significant debt burden and thus easily, aggressive growths translate to higher returns to shareholders.

Fidelity Bank has delivered an average annual capital gain of more than 100 per cent over the past five years and ranked among the elite stocks with the highest corporate governance rating at the Nigerian stock market.

The secondary or stock market performance has been driven by massive expansion in business operations and strong growth in profitability. Fidelity Bank has recorded an average annual profit growth of 64 per cent over the past three years.

The bank has also seen rapid expansion in customer base and assets as total balance sheet size leapt from N2.1 trillion to N6.2 trillion, the sixth largest in the Nigerian banking industry. The balance sheet was driven by a hefty total deposit of more than N4 trillion, equally the sixth biggest in the industry.

 

Hot this week

PAU 26th Inaugural Lecture: Ekundayo Mesagan Explores Fossil Energy, Sustainability Puzzle

Pan-Atlantic University hosted its 26th Inaugural Lecture, delivered by...

NDIC Wins Verbatim’ s Pillar of Integrity in Public Service Award

Rep of Chairman, Independent Corrupt Practices and Other Related...

Nigeria Advances Defence Industrial Ambitions Ahead of AFRIDEX 2026

Nigeria is continuing to develop its defence industrial capabilities...

‘Strategic Use of FOI Act Must Promote Transparency, Accountability, Public Participation in Governance’

  Communiqué Issued at the close of a Multi-stakeholder Conference to...

The Data Game: Numbers-Facts & Figures-Data

  12 billion: Total benefits delivered to retirees under...

Topics

Leadway Group Showcases Unified Products, Services Offering via Leadway One Campaign 

The Leadway Group, one of Nigeria's leading non-banking financial...

De-Marketing: The Return of Old Demon in Banking Sector

Overview The old demon known as de-marketing has made an...

Brokers, Arbitrators Partner on Insurance Growth

The Assistant Executive Secretary, Nigerian Council of Registered Insurance...

NIPR, P+ Measurement Partner on Media Monitoring

Clockwise: General Secretary, Lagos State Chapter, Nigerian Institute of...

Saraki’s Albatross: The Need to Sheath Animosity

When the 2015 general elections were approaching, the ruling All Progressive Congress (APC) preached and campaigned transformation and transition from the status quo that the former ruling People’s Democratic Party (PDP) used in administering the affairs of the nation for nearly two decades. The APC clamoured for substitution of the then state of affairs. They adduced reasons why it was good for Nigeria to make the 2015 election and its aftermath different in some particular ways, without permanently losing former characteristics or essence of nationhood to replace what they described as slow pace of development which is change.

Linkage Assurance: N1.4bn Profit, N1.4bn Claims Paid in H1, 2022

Daniel Braie Managing Director/CEO Linkage Assurance Plc Linkage Assurance Plc has beaten...

Warrior Mums Global to Host Inaugural Warrior Mums Conference 2026 in Lagos

  Empowering Mothers to Raise Leaders, Nation Builders and...