Benefits of Access Holdings’ Rights Issue for investors

The Central Bank of Nigeria (CBN) on  March  28, 2024,announced a  two-year  bank  recapitalisation exercise,  which commenced on April 1, 2024, and is expected to end on March 31, 2026. In line with this development, Access Holdings Plc, one of Nigeria’s largest financial institutions, had  announced plans to raise a staggering  N351 billion through a rights issue.

The company  has a capital raising programme of  $1.5 billion, planned to be executed via  equity, quasi-equity, and debt issuances.  For investors, the capital raising presents  an opportunity  to expand the company’s earnings window and improve returns on investment.

For the right issue,  Access Holdings is offering 17.772 billion ordinary shares of 50 kobo each to existing shareholders at N19.75 per share. The offer opened on Monday, July 8, 2024.

The offer period, which was initially scheduled to close today, August 14, 2024, has now been extended to August 23, 2024. The extension followed approval of the Securities & Exchange Commission (SEC).

Access Holdings extended the acceptance period for the rights issue, providing existing shareholders and other investors additional opportunity to participate in the new capital raising.

In a regulatory filing at the Nigerian Exchange (NGX), Access Holdings explained that the decision to extend was in response to the recent nationwide protest that disrupted operations of businesses and individuals across Nigeria.

Stakeholders insist that the funds  raised  is expected to fortify the bank’s capital base, supporting its continued expansion and its ability to seize emerging opportunities in the financial sector.

The proceeds of the proposed Rights Issue would be used to support ongoing working capital needs including organic growth funding for its banking and other non-banking subsidiaries.

The plans for the  programme were disclosed in the Group’s Notice of the 2nd  Annual General Meeting holding on April 19, 2024,  which was published on the Nigerian Exchange portal on March 27, 2024.

With the rights issue, Access Holdings will see an expansion in its issued share capital from N17,772,612,811.00 , divided into 35,545,225,622 ordinary shares, to N26,658,919,216.50.

This expansion is facilitated by the creation of an additional 17,772,612,811.00 ordinary shares, each priced at N0.50 Kobo, which will rank pari-passu with the existing shares of the company.Existing  shareholders are to purchase one ordinary share for every two existing shares held.

The recapitalisation plan  set by the CBN requires  minimum capital of N500 billion, N200 billion, and N50 billion for commercial  banks with  international,  national, and  regional licenses respectively.

Likewise, the CBN also raised capitalisation baseline for Merchant Banks (N50 billion) and Non-interest Banks (National: N20 billion and Regional: N10 billion).

The options for the banks include   private placement,which allows lenders to seek new funds from pre-selected private investors and rights issue,  which authorises them to invite existing shareholders to purchase additional shares in the bank at a discounted price relative to the current market price, among others.

Shareholders give nod to Access Holdings Rights Issue

Different groups of shareholders associations expressed their optimism on the ongoing rights issue by Access Holdings Plc.

They described Access Holdings as a forward-thinking financial institution with the right leadership and customer services to drive growth and profitability.

Shareholders said the ongoing capital raising exercise by the bank would lead to significant growth in operations and create higher value for all shareholders. The shareholders outlined Access Holdings’ track record of success as Nigeria’s most profitable lender, noting that the additional capital would scale up the output of the bank.

They described Access Holdings as a great financial institution that has consistently delivered good returns to shareholders.

They expressed their confidence that the bank will sustain its success trajectory success and payment of good returns to shareholders.

Chief Sunny Nwosu, founder and former National Coordinator of the Independent Shareholders Association of Nigeria (ISAN) advised Access Holdings to continue to live up to shareholders and other stakeholders’ expectations through quality services delivery and good returns on investment.

According to him, the rights issue will be oversubscribed given the bank’s records of performance and delivery on set targets.

Nwosu said Access Holdings remains a solid institution,which has over the years surpassed shareholders expectations and has what it takes to keep the flag flying higher.

“I do not think that Access Holdings will disappoint investors. They have consistently delivered and exceeded investors’ expectations, and this current offer will not be an exception,” he said.

He projected that the Access Holdings shares wouldrecord significant appreciation whereby investors will have something significant to take home now, and in the many more years to come.

Nwosu said he expects investor confidence to be sustained, as the institution’s track record guaranteesacceptance and investments anytime it comes to raise new funds from the market.

Also speaking, Bisi Bakare, the National Coordinator, Pragmatic Shareholders Association (PSAN),  said Access Holdings had what it takes to attract the right investors, and it is already doing so with ease.

She highlighted the bank’s consistent dividend payments and robust financial performance, making it an attractive investment.

Bakare  expressed her association’s support for the Rights issue, expressing the optimism that the offer will be over-subscribed at the end of the day.

She said members of her association have been advised to take up their rights because the bank had  all it takes to continue to declare profits and dividends.

She said: “I am going to take my rights, and we have advised other shareholders to do so. Investors should also see the opportunities the offer presents, based on the track  record of success that is synonymous with Access Holdings. The Rights Issue is very good, and attractive to savvy investors”.

Taiwo Oderinde, also a member of the Proactive Shareholders Association, said Access Holdings has really added value to the economy and investors.

According to him, the company has surpassed projections in terms of how it has grown from its humble beginning tothe status  of a global brand.

He said the  bank had  been able to grow through mergers and acquisitions, and investors should take advantage of the rights issue.

According to him, anyone that invests in the offers will count huge gains in the years to come. “I predict great returns to investors in the rights issue,” he said.

National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie,  said the bank’s expansion into new markets will begin to pay off now, which presents good opportunities for investors of all classes.

He advised the bank to continue to equip its branches in the domestic market and offshore with the right technology to enable them continually to deliver quality services and bountiful returns to shareholders and all stakeholders.

He said investors are investing at the right time, because all the years of expansion and opening in new markets will begin to produce the right results.