The stock market resumes trading this week, with a focus on Wema Bank, Seplat and Zenith Bank on the exchange floor of the Nigerian Exchange Limited (NGX).
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Wema Bank is seeking fresh N25 billion from private sources to fund its retail and corporate business, a move that will increase its debt profile.
Part of the funds, which will be raised through bond issuance, will be disbursed as loans to Nigerian Small and Medium Enterprise (SME) businesses.
While the N25 billion bond will increase Wema Bank’s debt and put pressure on its earnings, the decision to borrow from the bond market is to also raise the company’s turnover.
It will strengthen the firm’s competitiveness in the retail and corporate markets by having enough liquidity to meet loan demands, which in turn translates to profits on credit disbursed, thereby, enabling Wema Bank to improve shareholders’ investment value in the longterm.
Seplat is in a race against time, as the company hopes to complete its acquisition of ExxonMobil’s stake in Mobil Producing Nigeria Unlimited (MPNU) before May 29, 2023.
Both Seplat and ExxonMobil disclosed their acquisition deal in February 2022, but till date, the assets have not been transferred due to rejection from majority stakeholder in MPNU, the Nigerian National Petroleum Company Limited (NNPCL) and the oil market regulator, Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
President Muhammadu Buhari being the Minister of Petroleum had initially assented to the deal, however, he later withdrew his approval following a protest from the NNPC and NUPRC.
The deal is now threatened by the emergence of a new administration on May 29, as it will delay the deal even longer until the new president appoints a new Petroleum minister, who might not favour the acquisition.
This will affect the benefits that shareholders hope to gain if the deal had succeeded and the earnings Seplat could have profited from the acquisition – in response, the deal falling through could impact shareholders’ confidence and investment.
Zenith Bank is finally walking the same path as Guaranty Trust Bank (GTBank) and Access Bank by establishing a financial holding company.
In a corporate document released last week, Zenith Bank said its holding company, Zenith Holdco Plc, is in formation, and will be led by its current chairman, Jim Ovia.
The holdco will enable Zenith Bank to divert into businesses that are not core banking and increase its group turnover, which will put the firm in a position to improve the value of investments held by shareholders in the company in the longterm.
This plan could influence investors’ decisions towards Zenith Bank in the capital market and impact shareholders’ investment as well.
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