Access Holdings N351 bln rights issue and the rights of shareholders

By Samuel Bankole

The Central Bank of Nigeria (CBN) announced on March 28, 2024, the commencement of a two-year bank recapitalization exercise, which started on April 1, 2024, and is set to conclude on March 31, 2026.

In response to this directive, Access Holdings Plc, one of Nigeria’s leading financial institutions, disclosed its intention to raise N351 billion through a rights issue.

Access Holdings has outlined a capital raising plan of $1.5 billion, which will be executed through equity, quasi-equity, and debt issuances. The move is seen as an opportunity for investors to enhance the company’s earnings potential and improve returns on their investments.

As part of the rights issue, Access Holdings is offering 17.772 billion ordinary shares at N19.75 per share, with each share having a nominal value of 50 kobo.

The rights issue, which was launched on July 8, 2024, was originally scheduled to close on August 14, 2024, but has now been extended to August 23, 2024, following approval from the Securities & Exchange Commission (SEC).

The extension allows existing shareholders and other investors additional time to participate in the capital-raising effort.

Access Holdings explained in a regulatory filing with the Nigerian Exchange (NGX) that the decision to extend the offer period was influenced by the recent nationwide protests that disrupted business operations across Nigeria.

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The capital raised through the rights issue is expected to bolster the bank’s capital base, supporting its continued expansion and enabling it to capitalize on emerging opportunities within the financial sector.

The funds will be directed toward meeting ongoing working capital needs and supporting organic growth across its banking and non-banking subsidiaries.

The CBN’s recapitalization plan mandates minimum capital requirements of N500 billion, N200 billion, and N50 billion for commercial banks with international, national, and regional licenses, respectively. Merchant banks and non-interest banks are also required to meet new capitalization thresholds.

Stakeholders, including various shareholder groups, have expressed optimism about Access Holdings’ rights issue, highlighting the institution’s strong leadership, customer service, and track record of profitability.

They believe that the additional capital will drive significant growth in the bank’s operations and enhance shareholder value.

Access Holdings’ ongoing expansion strategy, including its ambitious five-year plan, aims to establish a presence in at least 26 countries by 2027, supported by investments in infrastructure and technology. The bank’s customer base is projected to grow to 125 million by 2027, further solidifying its market leadership.

The rights issue and the bank’s broader strategic initiatives are seen as critical steps in positioning Access Holdings as a leading financial institution in Africa and beyond, with a focus on delivering long-term value to shareholders and supporting economic growth across the continent.