Guaranty Trust Holding Company (GTCO) will raise N500 billion through a public offer of its shares as early as July, the financial services group said Friday.
The corporation has submitted a preliminary prospectus to the Securities and Exchange Commission, which regulates the capital market, according to a regulatory filing at the Nigerian Exchange Limited (NGX).
Both the number of shares to be offered and the price range for the public offer are yet to be decided, GTCO said.
“The net proceeds of the Proposed Offering will be used for
(i) the growth and expansion of the GTCO PLC Group’s businesses,” Nigeria’s biggest lender by market value stated.
“Such planned growth and expansion will be effected through investments in technology infrastructure to fortify existing operations, the establishment of new subsidiaries and selective acquisitions of non-banking businesses,” it added.
GTCO is also considering committing some of the proceeds to recapitalise its commercial banking subsidiary, Guaranty Trust Bank Limited.
Following a directive from the Central Bank of Nigeria to raise their capital base significantly within 24 months beginning from April, lenders in Nigeria are racing to meet the new rule with options like public offering, increasing debt and mergers & acquisitions likely to be explored.
Banks with international banking licences like GTCO have had their minimum capital requirement increased tenfold from N50 billion.
Those with national operations require N200 billion in capital relative to a previous threshold of N25 billion.
The push to ensure banks shore up their capital buffers is part of the broad plan to help grow Nigeria into a $1 trillion economy by 2030.
Ecobank Nigeria, the local unit of the Lome-based pan-African lender Ecobank Transnational Incorporated, is the only bank exempted from meeting the new requirement of all the lenders listed on the NGX.
GTCO said its offer is aimed at qualified institutional and retail investors in Nigeria and eligible institutional investors outside the country.
The financial services group hopes to apply for the approval of the board of NGX regarding the listing and admission of the shares from the offer on the exchange.
“Inflation has weakened the value of money over time, which makes recapitalisation imperative and inevitable,” said Muda Yusuf, the chief executive of Lagos-based Centre for Promotion of Private Enterprise.
“The essence is to ensure the safety of depositors’ funds, strengthen the stability of the financial system, deepen resilience of the banking system and reposition the bank to support growth,” he added.
Read the full article here
