By Uche Usim
On March 28, the Central Bank of Nigeria (CBN) launched a two-year bank recapitalisation exercise, beginning on April 1, 2024, and scheduled to conclude on March 31, 2026. In alignment with this initiative, Access Holdings Plc, a major player in the nation’s financial landscape, announced its ambitious plan to raise an impressive N351 billion through a rights issue.
Access Holdings has set its sights on a comprehensive capital-raising programme valued at $1.5 billion, utilising a combination of equity, quasi-equity, and debt instruments. For investors, this presents a golden opportunity not only to fortify their stake in one of Nigeria’s most profitable financial institutions but also to enhance their returns as the company expands its earnings potential.
In its rights issue, Access Holdings is offering 17.772 billion ordinary shares, priced at 50 kobo each, to existing shareholders at N19.75 per share. The offer, which opened on July 8, 2024, was initially slated to close on August 14, 2024. However, with the Securities & Exchange Commission’s (SEC) approval, the closing date has now been extended to August 23, 2024. This extension provides existing shareholders and potential investors with additional time to participate in this significant capital-raising exercise.
Access Holdings disclosed in a regulatory filing at the Nigerian Exchange (NGX) that the decision to extend the rights issue was driven by recent nationwide protests that disrupted business activities across Nigeria.
Fortifying growth foundation
Stakeholders widely acknowledge that the funds raised from this rights issue are poised to significantly strengthen the bank’s capital base, enabling it to continue its expansion and capitalize on emerging opportunities within the financial sector. The proceeds from the rights issue are earmarked for supporting ongoing working capital needs, including funding organic growth for both its banking and non-banking subsidiaries.
The specifics of this rights issue were detailed in the Group’s Notice of the 2nd Annual General Meeting, held on April 19, 2024, and published on the Nigerian Exchange portal on March 27, 2024.
Share capital expansion
The rights issue will see Access Holdings’ issued share capital increase from N17.77 billion, divided into 35.545 billion ordinary shares, to N26.66 billion. This expansion is facilitated by the creation of an additional 17.772 billion ordinary shares, each priced at 50 kobo, which will rank pari-passu with the company’s existing shares. Existing shareholders have the option to purchase one ordinary share for every two shares currently held.
The CBN’s recapitalisation plan mandates a minimum capital of N500 billion, N200 billion, and N50 billion for commercial banks with international, national, and regional licenses, respectively. Additionally, the baseline capitalization for merchant banks has been raised to N50 billion, with non-interest banks required to meet minimum capital requirements of N20 billion for national licenses and N10 billion for regional licenses.
Banks have several options for raising the necessary capital, including private placements, which allow lenders to secure funds from pre-selected private investors, and rights issues, which enable them to invite existing shareholders to purchase additional shares at a discounted price relative to the current market value.
Shareholders rally behind Access Holdings’ vision
Access Holdings’ ongoing rights issue has garnered enthusiastic support from various shareholder associations, who view the initiative as a strategic move that will propel the bank to new heights of operational efficiency and profitability. They commend the bank’s leadership for consistently delivering strong financial performance and anticipate that the additional capital will further enhance the bank’s growth trajectory.
Sunny Nwosu, founder and former National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), expressed confidence that the rights issue would be oversubscribed, citing Access Holdings’ track record of exceeding shareholder expectations. Nwosu lauded the bank’s ability to consistently deliver impressive returns to investors and predicted that the current offer would be no exception, with significant appreciation in share value expected in the years to come.
Similarly, Bisi Bakare, National Coordinator of the Pragmatic Shareholders Association (PSAN), highlighted Access Holdings’ consistent dividend payments and robust financial performance as key factors that make the rights issue an attractive investment. She expressed optimism that the offer would be oversubscribed and encouraged her association’s members to take up their rights, confident that the bank would continue to deliver strong profits and dividends.
Taiwo Oderinde, a member of the Proactive Shareholders Association, praised Access Holdings for its substantial contributions to the economy and its ability to transform from a modest beginning into a global financial powerhouse. He emphasized that the bank’s growth, driven by mergers and acquisitions, has consistently delivered value to investors, and the rights issue presents another opportunity to capitalize on the bank’s success.
Boniface Okezie, National Coordinator of the Progressive Shareholders Association of Nigeria (PSAN), noted that Access Holdings’ expansion into new markets is beginning to yield positive results, presenting promising opportunities for investors. He advised the bank to continue equipping its domestic and offshore branches with cutting-edge technology to sustain its competitive edge and deliver exceptional returns to shareholders.
Commitment to long-term shareholder value
Aigboje Aig-Imoukhuede, Chairman of Access Holdings Plc, emphasised that the decision to undertake a rights issue reflects the group’s commitment to strengthening the bond between the company and its shareholders. He reiterated that shareholder value remains at the core of the group’s business vision and urged shareholders to take advantage of this opportunity to secure bountiful returns on their investments.
Speaking at the “Facts Behind the Rights Issue” session at the NGX, Aig-Imoukhuede assured shareholders that the group is entering a new phase of its remarkable growth story, where long-term value creation will be a key focus.
Bolstering infrastructure, enhancing connectivity
Access Holdings Plc has also reaffirmed its dedication to addressing infrastructure deficits and improving capital access across Africa. Managing Director of Access Bank Plc, Roosevelt Ogbonna, highlighted the group’s strategic focus on bridging infrastructure gaps and connecting Africa with the rest of the world. He underscored the importance of this mission in an era where globalization is reshaping economies worldwide.
Ogbonna shared that Access Bank aims to expand its customer base to 125 million by 2027, solidifying its market leadership across the continent. This ambitious growth plan is part of a broader strategy that includes organic growth through strategic acquisitions, partnerships with international banks, and significant investments in infrastructure and technology.
Access Holdings’ five-year strategic plan targets establishing a presence in at least 26 countries by 2027, including key markets in the United Kingdom, France, and the USA. To support this expansion, the group plans to develop a cutting-edge digital platform, automated self-services, and open cost-effective branches in strategic locations.
Strategic partnerships to drive African integration
As part of its growth strategy, Access Holdings is forging strategic partnerships with major players in the financial sector. One notable collaboration is with Safaricom Plc and M-PESA Africa to expand cross-border money transfer solutions across Africa. This partnership will leverage Access Bank’s extensive network in 15 African countries, including Nigeria, Kenya, Ghana, and Tanzania, to offer affordable remittance solutions to key markets.
Additionally, Access Holdings is collaborating with MasterCard to create a unified payment infrastructure that integrates cross-border money transfer systems across multiple African markets.
This solution is expected to enhance the accessibility and efficiency of international payments, benefiting businesses and consumers alike.
Ogbonna emphasised that Access Holdings’ strategic expansion could position Africa as a global economic leader by expanding financial and credit services to remote areas of the continent. He highlighted the group’s ability to unlock new opportunities for African businesses and consumers, thereby enhancing the continent’s interconnectedness and economic progress.
Access Holdings’ rights issue not only represents a significant opportunity for investors to strengthen their stake in a leading financial institution but also underscores the group’s commitment to driving growth, enhancing shareholder value, and fostering economic development across Africa. The strategic initiatives outlined by Access Holdings’ leadership are set to propel the company into a new era of success, with shareholders poised to reap the benefits of this forward-looking vision.