FBN Holdings to raise capital via Rights Issue

FBN Holdings has disclosed the company will conduct a Rights Issue to raise funds to boost its available capital for operational needs.

Rights Issue are often conducted by companies to trade their shares to existing shareholders in exchange for fresh capital.

Ripples Nigeria understands that this enables companies to raise additional capital without the burden of debt and interest or increasing their liabilities.

The funds are usually sought to expand operations, acquire assets and clear debt obligations, amongst other operational activities.

According to reports on Monday, FBN Holdings shareholders will vote on the fundraising by Rights Issue on August 15, 2023, at the company’s Annual General Meeting (AGM).

What you need to know

The decision to conduct the Rights Issue means FBN Holdings will be selling more of its stake in the company to existing shareholders, which includes the majority shareholders of the company.

READ ALSO:FBN Holdings fined for failing to comply with regulation, posts N187bn net profit

This comes at a time majority shareholders are reportedly looking for ways to edge out the largest shareholder, Oba Otudeko, who acquired a 13.3 per cent stake in the firm earlier this year.

Recall that Ripples Nigeria had reported that the Central Bank of Nigeria (CBN) restricted investors within a bank from selling their shares to another shareholder to increase the latter’s stake to above five per cent within the company or sell five per cent to another shareholder within the firm.

Any investor planning to do so must request approval from the financial regulator. This is a setback for the majority shareholders who now have a chance to buy more shares in FBN Holdings through the Rights Issue.

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