FIDELITY Bank Plc has extended its capital raising offers earlier scheduled to close on Monday, July 29 to August 12, amid a decline in its share price.
The two-week extension was confirmed by the bank’s media and internal communications team lead, Adebowale Banzi, on Monday, July 29.
The bank also disclosed it had gotten the approval of the Securities and Exchange Commission (SEC) for an extension after the 28-day initial offerings closed on Monday, July 29.
“An application was made to the Securities and Exchange Commission to extend the closing date of the application and acceptance list and this has been approved. The application/ acceptance list will therefore now close on Monday, 12 August 2024,” the bank said in an official notification.
On June 20, Fidelity Bank opened its application for an N127.1 billion combined rights issue for existing investors and a public offer for new investors, The ICIR reported.
The capital raising is to enable the bank to meet the Central Bank of Nigeria’s (CBN) minimum capital base of N500 billion.
The apex bank had in March issued a guideline for banks’ mandatory recapitalisation aimed at repositioning the banking system ahead of the federal government’s dream of achieving a $1 trillion economy by 2030.
Fidelity Bank’s combined offer comprises a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share, and 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.
The rights issue is allocated based on one new ordinary share for every 10 existing ordinary shares held as of the close of business on Friday, January 5 this year.
However, on Monday, July 29, Fidelity Bank’s share price closed at N10.65 from N10.85 when it opened its capital raising offer on June 20. This shows that the share price of Fidelity Bank has lost 0.2k within the 28-day trading offer.
Speaking of the capital raising offers, a capital market operator, David Adonri, told The ICIR that there has been mixed sentiment in the capital market since Fidelity Bank kick-started its offer.
According to him, some investors have been quite enthusiastic and responded positively, especially on shares issued at a discount, while a lot of investors feel uncomfortable with shares offered at higher prices than the market price.
“I think Access Bank is caught up in that web; a little bit for Zenith Bank as well as its share price came below the price in the secondary market. These are some of the challenges that have occurred in the course of this exercise.
“We are already engaging with the regulator to see how a special waiver can be made so that there can be a discount to the secondary market price to serve as an incentive for investment in the primary market,” Adonri, the executive vice chairman of Highcap Securities Limited, said.
He believes that Fidelity Bank has been lucky with its offers because its share price has been higher in the secondary market than in the primary market.
Meanwhile, trading activities closed in the red on Monday as investors lost N111.77 billion following a decline in the market capitalisation to N55.72 trillion from N55.61 trillion.
Also, the All-Share Index decreased to 98,132.15 basis points from 98,201.49 basis points
Although 22 companies’ stocks appreciated and 21 companies’ stocks declined, it could not rebound the market to close in the green.
Africa Prudential topped the gainers’ list with 10.00 per cent to N10.45, while Caverton Offshore Support Group declined by 10.00 per cent to N1.35 to lead the losers’ chart.
The shares of United Bank for Africa and Seplat traded the most at 69.06 million volume and N2.71 billion value for the day.
“The stock market closed in red, experiencing a dip at the end of the trading day. Market’s trajectory continues in the negative region, extending losses. We anticipate mixed sentiment in the remaining days of the week,” research analysts at GTI said.