Zenith Bank to raise N290bn fresh capital

Zenith Bank Plc has finalised plans to raise about N290bn fresh capital, which is higher than the N230bn it needs to meet the fresh recapitalisation mandate of the Central Bank of Nigeria.

According to a statement from Zenith Bank on Monday, the capital raise was announced at the bank’s rights issue/public offer signing ceremony on Monday in Lagos.

According to the lender, the capital raise will be a combination of a rights issue and a public offer.

It added that the rights issue would be offering 5,232,748,964 ordinary shares of 50 Kobo each at N36.00 per share, while the public offer would be presenting 2,767,251,036 ordinary shares of 50 kobo each at N36.50 per share to new investors.

It noted that the rights issue allowed existing shareholders to purchase additional shares in proportion to their current holdings and offered based on one new ordinary share for every six existing ordinary shares held as of Wednesday, July 24, 2024.

On the other hand, the public offer is open to the general public and aimed at attracting new investors.

The Group Managing Director/Chief Executive Officer of Zenith Bank Plc, Dr Adaora Umeoji, said, “Today, we signed the transaction documents with respect to Zenith Bank’s N290bn rights issue and public offer. This is slightly above the N230bn required for us to meet the CBN’s minimum recapitalisation requirement.

“We are extremely pleased with the level of enthusiasm we have already seen from our existing shareholders for the Rights Issue. Beyond existing shareholders, incorporating a public offer is crucial to ensure that our customers, who are not yet shareholders, can have the opportunity to join in the ownership of this premium brand.

“In terms of tier-1 capital, Zenith Bank has been adjudged by The Banker, Financial Times to be number one in Nigeria and the only Nigerian Bank in the top 600 banks globally. Over the years, we have consistently rewarded our esteemed shareholders. Specifically, in the last five years, we have maintained the record as the highest dividend-paying Bank in Nigeria. In 2023, we set a record as the only Nigerian bank to pay a dividend of N4 per share.”

She added that the proceeds from the capital raise will be channelled towards expanding banking operations across Africa and internationally, investing in technology infrastructure, and supporting working capital on an ongoing basis.

The Chief Executive of Stanbic IBTC Capital Limited, Mr Oladele Sotubo, commended the management of Zenith Bank for its commitment to the transaction, which provides an opportunity for existing shareholders to consolidate their position and welcomes new investors to join the journey towards the future of Zenith Bank.

He also expressed gratitude for the opportunity for Stanbic IBTC Capital Limited to lead and guide the execution of the transactions.

He added, “A combined offer that is both a rights issue and a public offer confirms Zenith Bank’s position as a pacesetter and a role model, which will undoubtedly spur more transactions in the capital market.”

Stanbic IBTC Capital Limited is the lead issuing house for the rights issue and public offer with joint issuing houses, including Quantum Zenith Capital & Investments Limited, CardinalStone Partners Limited, Meristem Capital Limited, Chapel Hill Denham Advisory Limited, Coronation Merchant Bank Limited and Vetiva Advisory Services Limited.

The Offer will open on Thursday, August 1, 2024, and close on Monday, September 9, 2024.

In late March, the Central Bank of Nigeria directed Deposit Money Banks to recapitalise. Per the CBN recapitalisation circular, commercial banks with international authorisation are to increase their capital base to N500bn and national banks to N200bn while those with regional authorisation are expected to achieve a N50bn capital floor. Similarly, non-interest banks with national and regional authorisations will need to increase their capital to N20bn and N10bn, respectively.

According to the CBN circular, only the share capital and share premium items on the Shareholder Fund portion of the balance sheet will be recognised in this particular round of recapitalisation.

The apex bank circular said the banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026, using the options of raising additional capital, mergers and acquisitions and licence change.