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By Chukwuma Umeorah
Femi Otedola’s growing stake in First HoldCo Plc is putting Nigeria’s regulatory framework for substantial shareholdings and control in the banking sector under closer scrutiny as the businessman continues to increase his investment in the parent company of First Bank of Nigeria Limited.
Otedola, who is chairman of First HoldCo, has accumulated additional shares through related entities in recent weeks, taking his interest to about 27 per cent, according to market disclosures. He has also indicated that he may eventually increase his holding to a majority stake of more than 51 per cent. The development has drawn attention to the distinction between substantial ownership, effective influence and outright control under Nigeria’s banking and capital-market regulations.
The Central Bank of Nigeria (CBN) requires regulatory approval for significant holdings in financial holding companies (FHCs) while the Investments and Securities Act (ISA) 2025 contains separate takeover provisions that become relevant when an investor approaches a position capable of conferring control. The issue, therefore, is not simply how much of First HoldCo Otedola can own, but how the regulatory framework applies as his stake moves from substantial ownership towards potential control.
5 per cent regulatory threshold, not an ownership ceiling
The CBN’s Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria do not establish a straightforward maximum percentage that a private investor can own in a financial holding company. Instead, the guidelines require prior approval for any shareholding of 5 per cent and above, as well as for any change in ownership that results in a change in control.
Where shares are acquired through the secondary market, the FHC is required to apply for approval within seven days of the acquisition. The distinction is important in Otedola’s case. The 5 per cent threshold does not mean that an investor is prohibited from owning more than 5 per cent. Rather, it places substantial shareholdings within the CBN’s regulatory oversight.
The CBN framework also defines control with reference to the principles under IFRS 10, including an investor’s power over an investee, exposure or rights to variable returns and the ability to use that power to affect those returns.
Consequently, control is not determined solely by a numerical ownership threshold. The distribution of other shares, voting patterns, board composition and governance arrangements can also determine the practical influence attached to a large shareholding.
First HoldCo stake raises banking concerns
The significance of Otedola’s investment is also linked to First HoldCo’s structure. Its 2025 audited financial statements identify First Bank of Nigeria Limited as a wholly owned direct subsidiary of the holding company. The group also has subsidiaries involved in asset management, trusteeship, securities and insurance-related businesses.
Otedola’s purchases are therefore investments in the parent company of a major deposit-taking bank rather than direct purchases of First Bank shares. First HoldCo itself, however, operates under the CBN’s financial holding company framework.
Under the CBN guidelines, an FHC is expected to serve as a source of financial strength to its subsidiaries and maintain sufficient financial flexibility and capital-raising capacity to support them, including during periods of financial stress. The regulator also requires FHCs to maintain competent and independent boards capable of overseeing internal controls and risk management.
The ownership question consequently extends beyond First HoldCo shareholders to the governance of the parent company and its relationship with the banking subsidiary.
Analysts separate stake size from control
The increasing stake has not been viewed by market operators as an automatic governance problem. The Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, said the presence of influential core investors in Nigerian banks had not, in itself, translated into governance failures or operational instability. “In almost all the major banks, we have those use cases replicated, and it has not in any way jeopardised efficient operations,” he said.
According to Chukwu, the key consideration is whether the ownership and leadership structure complies with corporate-governance standards. “What matters is that you have leadership and ownership that want to adhere to good corporate governance standards and that are not overbearing or unduly negatively influential,” he said.
“If they are positively influential, then it even becomes beneficial to the bank,” he added.
Chukwu said the numerical size of an investor’s stake should therefore not be treated as a standalone measure of control, pointing to the role of other shareholders and independent directors in providing checks within the governance structure.
“There is still a larger per cent shareholding outside that structure, and there are minority interests. The constitution of the board also includes independent directors,” he said.
First HoldCo’s 2025 audited accounts showed that shareholders with holdings of 5 per cent and above collectively accounted for 41.59 per cent of the company’s shares as of December 31, 2025, while free float stood at 58.34 per cent. Otedola’s direct and indirect interests at that date were 18.12 per cent. His position has since increased through subsequent purchases.
30 per cent takeover threshold
Otedola’s stake nearing 30 per cent should not be confused with the CBN’s 5 per cent regulatory threshold. Under the ISA 2025, a person cannot acquire shares, whether through a series of transactions or otherwise, that carry 30 per cent or more of the voting rights of a company without engaging the takeover provisions of the law, subject to applicable exemptions.
An investor intending to acquire 30 per cent or more is required to make a takeover bid to other shareholders in accordance with the applicable provisions. The law requires the Securities and Exchange Commission (SEC) to ensure that acquisitions of voting shares or control are conducted in an efficient, competitive and transparent manner, while shareholders, including minority shareholders, receive fair and equal treatment.
For Otedola, the distinction between the two thresholds is significant. The CBN’s 5 per cent rule is concerned with substantial ownership of a financial holding company and prudential regulatory oversight. The 30 per cent provision under the ISA is focused on the acquisition of voting rights and the protection of shareholders when an investor moves towards control of a public company.
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At about 27 per cent, Otedola is therefore already a substantial shareholder under the banking regulatory framework, but he has not yet crossed the 30 per cent takeover threshold under the capital-market law.
51 per cent would mean majority control
Otedola’s stated ambition to potentially increase his holding beyond 51 per cent would take the issue into a different phase. A stake above 50 per cent would ordinarily give an investor majority voting power in the company, subject to relevant regulatory approvals and corporate requirements.
However, majority ownership of First HoldCo would not give Otedola unrestricted control over First Bank’s operations. First Bank remains subject to CBN supervision, while First HoldCo is subject to requirements applicable to financial holding companies and listed entities.
The CBN framework requires an FHC to maintain an independent board and comply with applicable corporate-governance standards. It also restricts the extent to which the holding company can interfere in the management and decision-making of its subsidiaries.
The guidelines provide that “an FHC must not assume the powers or functions of the board or internal management of its subsidiaries, interfere in their day-to-day activities or require subsidiaries to act on its instructions in making decisions.” This means that ownership of the parent company and operational management of the banking subsidiary are not intended to be interchangeable.
Investors focus on value creation
While the regulatory implications are being assessed, some market operators have focused more closely on the investment value being created by Otedola’s continued purchases.
Chairman of Highcap Securities, David Adonri, said the market’s response to the increasing stake had so far been positive, arguing that the purchases had strengthened confidence in First HoldCo and contributed to shareholder value.
“He continues to inject more capital and confidence into the institution through his increasing stake. The market has responded positively, and shareholders have benefited from the appreciation in the share price,” Adonri said.
He said investors generally assess such developments from the standpoint of returns, earnings performance and dividend prospects.
“For many investors, what matters is whether the company is creating value. Those who remain invested benefit from the upside in the stock, while those who decide to exit are also able to realise gains,” he said.
Adonri acknowledged that increasing ownership concentration could still attract scrutiny, particularly where a dominant shareholder begins to emerge in a regulated financial institution.
However, he said many retail investors were more focused on earnings, dividends and market performance than on ownership structure.
“The average retail investor have the herd mentality. They tend to follow market direction and sentiment. If they see strong performance and sustained value creation, they are likely to remain invested regardless of who the dominant shareholder is,” he said.
The implication is that minority shareholders can benefit from a rising share price even as their relative influence over the company’s strategic direction declines.
This is one reason takeover regulations require shareholders to be given protections when an investor moves towards control.
Higher stake could reduce free float
The company’s 2025 accounts showed free float of 58.34 per cent, down from 79.46 per cent a year earlier, although First HoldCo said it remained compliant with NGX free-float requirements for companies on the Premium Board.
A further increase in Otedola’s stake would naturally reduce the proportion of shares available to other investors. That would not automatically mean the company would fall below applicable exchange requirements. However, greater ownership concentration could affect the distribution of voting power and, depending on the scale of future purchases, the liquidity of the shares available to the broader market.
Lagos-based trader and capital-market analyst Ade Ojapa said the size of Otedola’s investment could reinforce market confidence in the group’s operational efficiency, balance-sheet recovery and long-term earnings prospects. “Market participants expect the sheer size of the trade to boost trading volume and sentiment around First HoldCo equities as the market digests the structural impact of the deal,” he said.
Otedola moves closer to control
At about 27 per cent, he holds a substantial economic and voting interest in First HoldCo, but that position is not synonymous with outright control. If his holding reaches 30 per cent, the takeover provisions of the ISA 2025 would become directly relevant, subject to applicable exemptions and regulatory requirements.
If he eventually moves above 50 per cent, the nature of his relationship with First HoldCo would change from that of a large minority shareholder to a majority shareholder, again subject to regulatory approvals and other applicable rules.
