Fidelity Bank Plc started its N127.1 billion combined rights and public offers to rousing support from the investing public as key capital market stakeholders recalled the symbolic importance of Fidelity Bank’s impressive growths and investor-friendly disposition over the years.
From the Nigerian Exchange (NGX) to stockbrokers, investors, and customers; the N127.1 billion combined rights and public offer received unreserved recommendations, with industry thought leaders citing the performance of Fidelity Bank in its core banking operations and as a quoted company at the stock market.
They said Fidelity Banks N127.1 billion combined rights and the public offer was the right way for the nation’s banking recapitalisation exercise to start as the bank, which has the highest corporate governance rating and an average annual capital gain of more than 100 percent at the stock market, has strong appeal to the investing public.
Fidelity Bank is offering a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The bank is also simultaneously offering 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.
The acceptance and application lists for the rights issue and public offer, which opened on Thursday, June 20, 2024, are scheduled to close on Monday, July 29, 2024. The rights issue has been pre-allotted based on one new ordinary share for every 10 existing ordinary shares held as at the close of business on Friday, January 05, 2024.
The Doyen of Stockbrokers, the oldest practicing stockbroker, Alhaji Rasheed Yussuff, said Fidelity Bank has good records going for it with its history of impressive growth and profitability and dividend payments.
According to him, the bank is known to the market as a good investment, with evident records of impressive returns and corporate responsibility.
Yussuff, who was already a leading stockbroker and managing director of Trust Yields Securities Limited in 2004-2005 when Fidelity Bank launched its initial public offering (IPO) and listed its shares at the stock market, said the bank has been hitting all positive records that should encourage investors to buy more into it.
Referencing the banks’ impressive returns, Yussuff, who has more than five decades in the capital market and was principal dealing clerk for ICON Limited/ICON Stockbrokers in 1976, particularly noted that Fidelity Bank has been paying good dividends.
Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), Mr. Sam Onukwue, who recalled the founding days of Fidelity Bank in 1987, said he had watched Fidelity Bank sustained a commendable growth trajectory over the years.
He said the bank has shown exceptional growth and resilience, rising from being a private merchant in 1987 to becoming one of the largest, publicly quoted commercial banks in Nigeria. Fidelity Bank is one of the seven Nigerian banks with international banking licences.
Onukwue, who is also managing director of Mega Equities Limited, said Fidelity Bank’s history of performance underlines the strength of its management, noting that the bank has proven to be able to keep investors trust.
Chairman, Nigerian Exchange (NGX), Mr. Ahonsi Unuigbe said the combined offer marked a pivotal moment for the bank and the financial services sector.
This is a testament to Fidelity Bank’s unwavering commitment to strengthening its capital base and ensuring sustainable growth through amazing roles played by all of the professional parties to this transaction, Unuigbe, an investment banker and former director at Standard Bank, said.
He said the new banking recapitalisation is aimed at bolstering the resilience and stability of the nation’s financial institutions.
According to him, the ongoing recapitalisation has set robust minimum capital requirements that will ensure Nigerian banks are not only more solvent, but also capable of supporting the growth and development of the economy.
Acting Chief Executive Officer, Nigerian Exchange (NGX), Mr. Jude Chiemeka, commended Fidelity Bank for its performance and willingness to avail the investing public of every relevant information.
He assured that the NGX remains committed to supporting companies like Fidelity Bank in its quests to deepen the capital markets and foster an environment conducive to sustainable growth and innovation.
Founder, KAM Holding, Dr Kamoru Yusuf, said Fidelity Bank has shown to be an exceptional bank with focus on the development of Nigerian economy and companies.
He said investing in Fidelity Bank will be an investment in the growth of the Nigerian economy and companies like KAM Holding, the nation’s largest wholly indigenous metal and steel production company.
Yusuf, whose group has metamorphosed into a global business conglomerate operating in three countries across two continents, confirmed that KAM Holding has benefited immensely from financial support from Fidelity Bank.
Yusuf, who was physically present at a session at the NGX to present facts behind the offer to the investing public, underlined the relationship between increased capital for a business-focused bank like Fidelity Bank and the overall development of the Nigerian economy.
Addressing the investing public at the NGX, Managing Director, Fidelity Bank Plc, Dr. Nneka Onyeali-Ikpe, reiterated the commitment of the bank to delivering impressive returns to shareholders and supporting the growth of the Nigerian economy.
She explained that the new capital raising by Fidelity Bank was driven by its proactive business expansion plan having secured shareholders’ approval to raise new equity funds as early as August 2023. The Central Bank of Nigeria’s (CBN) directive on new minimum capital was released in March 2024.
The offer will increase our capacity to support our customers and their businesses. In summary, this capital raise will help our customers to grow, their businesses to thrive, and their economy to prosper, Onyeali-Ikpe said.
She assured that with its groundswell of support from enthusiastic shareholders, customers, and stakeholders, the bank is on course to achieving the N500 billion new minimum capital base, which will confirm the bank, beyond any doubt, as one of the biggest banks in Nigeria.
Onyeali-Ikpe noted that being the first bank to launch an offer out of the many banks in Nigeria after the CBN directive, Fidelity Bank has shown again to be a pace-setter.
According to her, Fidelity Bank seeks the CBN recapitalization directive as a significant opportunity for a stronger and more resilient banking industry.
We have embraced the challenge as a catalyst to propel us, towards a long-term vision of becoming a market leader across every product that we offer and segment that we sell, not just in Nigeria, but as an international bank, Onyeali-Ikpe said.
She said the proceeds from the N127.10 billion capital raising exercise would be instrumental in achieving its strategic growth plan.
She highlighted that the funds, firstly, would be deployed to drive, business growth and regional expansion.
We will strategically expand our footprints within and outside Nigeria to serve as a broader customer base and to unlock new market opportunities.
Secondly, we will have what we call technological transformation. We are committed to leveraging proprietary technology to improve operational efficiency and deliver exceptional customer service.
Thirdly, we intend to diversify and grow. By investing in information technology (IT) infrastructure and product distribution channels, we will aim to diversify our earnings base through digitalization and business expansion, Onyeali-Ikpe said.
She said the management recognised the importance of investors and are committed to delivering value to them as well.
Our track record of accelerated growth and consistent dividend payment is a testament to this, Onyeali-Ikpe said.
A recent review has shown that Fidelity Bank outperformed all major market indices for measuring returns at the Nigerian stock market, with the banks’ average annual return over the past five years twice the average return by the overall market and almost four times of average return in the banking sector.
A review of official trading reports at the Nigerian stock market showed that investors in Fidelity Bank have earned more than 507 percent in capital gains over the past five years, between May 31, 2019, and May 31, 2024
Fidelity Bank’s share price rose by 507.14 percent over the period, representing an average annual capital gain of 101.43 percent. This significantly exceeds all other major return benchmarks, including the banking sector.
With 507 percent capital gain in five years and an average annual gain of more than 100 percent, the return analysis implies that investment in Fidelity Bank is more attractive than other classes of assets, including fixed-income securities such as government and corporate bonds; real estate investment and mutual funds among others.
These returns underscore Fidelity Bank’s immense value as a stock for all times, helping investors to hedge against inflation while preserving significant long-term value.
The high divisible nature of shares investment and high free float of Fidelity Bank, which makes the bank’s shares easily available, underline the bank as a most attractive investment option for all cadres of investors- small, medium, and high net worth; retail and institutional investors.
The All Share Index (ASI) – the common, value-based index that tracks all share prices at the Nigerian Exchange (NGX), which is widely regarded as Nigeria’s benchmark for the equities market, recorded a five-year return of 219.61 percent, an average annual return of 43.9 percent.
Contrary to the significantly above-average performance of Fidelity Bank, the NGX Banking Index-which tracks the banking sector, doubled by 120.53 percent over the five years, representing an average annual return of 24.11 percent, more than 77 percentage points below Fidelity Bank’s average return.
Two other major price indices- the NGX 30 Index and NGX Main Board Index, recorded five-year cumulative returns of 185.73 percent and 265.6 percent respectively, representing average annual gains of 37.15 percent and 53.1 percent respectively.
The NGX 30 Index tracks the share prices of the 30 largest companies in the stock market while the NGX Main Board Index represents the largest and most diversified group of listed companies on the stock exchange. Fidelity Bank is quoted on the main board, like most other major banks and companies on the stock market.
The average annual return of 101.43 percent underlines that Fidelity Bank provides substantial returns for investors, even where such investors had borrowed money at the ruling interest rate and the invested fund was adjusted for the impact of the inflation rate.
Nigeria’s inflation rate peaked at a high of 33.69 percent in April 2024 while the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) recently increased the Monetary Policy Rate (MPR), otherwise known as benchmark interest rate, to 26.25 percent.
Fidelity Bank’s share price, which closed May 31, 2019, at N1.68 per share, rose successively to N10.20 per share by the end of May 2024.
The ASI had, during the period, rose from its opening index of 31,069.37 points to close weekend at 99,300.38 points. The NGX Banking Index rose from 361.57 points to 797.37 points. The NGX 30 Index, which opened the period at 1,286.68 points, closed the period at 3,676.44 points. The NGX Main Board Index appreciated from 1,267.54 points to close the weekend at 4,634.31 points.
About The Author
