New investor acquires major stake in Ecobank

In from Success Allantee…

Ecobank Transnational Incorporated (ETI) Plc, the pan-African financial services holding parent company of the Ecobank brand, has raised about N19.3 billion in a private share placement, according to official filing on the transaction.

ETI, which has been a subject of many foreign share acquisitions in recent times, offered 1.25 billion ordinary shares of $0.025 each to a private investor at N15.47, raking about N19.34 billion in new equity funds.

Although the details of the new investor were unknown as at the weekend, the shares that arose from the private placement were listed at the weekend at the Nigerian Stock Exchange (NSE), one of the Exchanges where the continental company is listed. ETI is listed on the NSE, Ghana Stock Exchange (GSE) and the BRVM.

The private placement gives the new investor a major equity stake of about 7.26 per cent, substantially above the 5.0 per cent threshold set by the Nigerian capital market authorities to indicate major equity holding. In a widely diversified share base, an investor with more than five per cent may be offered a sit on the board of directors.

Although the timeline for the private placement, which was previously unannounced, was not indicated in the filing document, the offer price of N15.47 per share was about 30 per cent lower than the current market value of N22 per share. The post-placement total shares outstanding of ETI stood at 17.20 billion ordinary shares and are currently valued at N378.5 billion.

Several Nigerian banks are under capital raising pressure amidst banking regulatory headwinds and the additional capital requirements that may be required of the full adoption of the Basel 11 standards.

ETI is one of the strategically important banks (SIBs), which are required to make additional capital provision than other ordinary banks. The lull in the Nigerian capital market has also scared away many potential issuers while some that braced the odds were forced to lower offer prices within the acceptance period.

In September last year, Qatar National Bank (QNB), had acquired more than 11 per cent equity stake in ETI in three deals valued at about N35.4 billion. QNB, which has Qatar Investment Authority (QIA) as its major shareholder, acquired about 1.77 billion ordinary shares of ETI in an off-market trade at the NSE. Off-market trade implied that the deals were sealed outside the floor of the NSE, although ETI still has to report such transactions in compliance with the listing rules at the NSE.

The acquisition transaction, which was concluded in three deals, was sealed at N20.01 per share, more than 20 per cent above ETI’s opening price of N16.62 per share during the trading session. Besides the ordinary shares acquisition, which gives QNB 11.1 per cent equity stake in ETI, QNB also acquired about 732.28 million preference shares. The acquisitions, the first by QNB in shares of ETI, give the Gulf bank a major inroad into the African market.

QNB, which is listed on the Qatar Exchange, has indicated it will be a long-term investor in ETI.

ETI was earlier in May 2014 added to the MSCI Frontier Market Index, a status that heralded further equity investment by the International Finance Corporation (IFC) in the bank in June 2014.

IFC, the private sector arm of the World Bank, acquired additional 4.6 per cent equity stake in ETI. ETI issued more than 838.32 million ordinary shares of 50 kobo each to IFC, through convertible loan deals involving two funds being managed by the corporation.

IFC acquired the shares through its managed funds-IFC ALAC Holding Company II and the IFC Capitalization (Equity) Fund LP. Under the deals, both funds converted convertible debts earlier granted to ETI to shares, with effect from July 1, 2014. The outstanding convertible loans of about $56.39 million for the IFC Capitalization (Equity) Fund LP and $18.10 million for the IFC ALAC Holding Company II will be converted to some 628.74 million and 209.58 million ordinary shares of ETI respectively.

It would be recalled that IFC had in 2012, through these two managed funds and another fund-Africa Capitalisation Fund Limited, acquired 8.63 per cent equity stake in ETI. It had acquired 1.25 billion ordinary shares at agreed price of 8.0 cents per share, totaling $100 million, about N15.6 billion.

The investment followed the signing of share subscription agreements in July 2012 between IFC and ETI when IFC invested $100 million by way of common equity in ETI.

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