Investors scramble for Fidelity Bank’s shares as lender unveils plan to raise fresh capital



Uba Group

The share price of Fidelity Bank Plc recorded a 10 percent price gain on Friday on the floor of the Nigerian Exchange Limited, as investors scramble for the stock in anticipation of share price rise induced by the bank’s proposal to raise fresh capital from the market.

The stock which opened trading at N7.16 per ordinary share of 50 Kobo rose to close trading at N7.82, with a market capitalization of N226.58 billion.

The bank had earlier announced its plan to raise fresh capital through a Right Issue and Public Offering in the coming days.

Fidelity Bank Plc, in a notice to the NGX on July 21, announced an Extra-Ordinary General Meeting fixed for Friday, August 11, 2023 to seek shareholders’ approval to raise new capital.

The meeting scheduled to hold by 10.00am will be conducted virtually.

The bank said the decision to increase the capital base among others is to enable it to take advantage of emerging business opportunities and secure long term profitability and competitive advantage, while ensuring increased shareholder value.

The notice also disclosed that shareholders will at the proposed EGM consider and pass five special resolutions as follows:
“That the issued share capital of the Company currently N16,000,000,000.00 (Sixteen Billion Naira) made up of 32,000,000,000 Ordinary Shares of N0.50 each, be increased up to N22,600,000,00.00 (Twenty-two Billion, Six Hundred Million Naira) by the creation of up to 13,200,000,000 (Thirteen Billion, and Two Hundred Million) additional Ordinary Shares of N0.50 each.

“That the Company undertakes a capital raising exercise via a Public Offer for up to 10,000,000,000 Ordinary Shares and Rights Issue of up to 3,200,000,000 Ordinary Shares representing 1 (one) new share for every ten (10) shares held, to new and existing shareholders respectively.

“That the Board of Directors of the Company be and is hereby authorised to allot the shares issued in accordance with resolution (2) above, which shall rank pari-passu with the Company’s existing issued shares, subject to the receipt of relevant regulatory approvals.

“That the Board of Directors be and is hereby authorised to perform all such lawful acts that are necessary to give effect to the above listed resolutions including but not limited to ensuring compliance with all regulatory procedures and requirements, obtaining all required approvals and filing within time, all regulatory returns in relation to the above resolutions.

“That the Memorandum and Articles of Association (Memart) of the Company be amended to reflect the Company’s new share capital after the capital raising exercise in Resolution 2 above and that the Board of Directors be and is hereby authorized to file the amended Memart at the Corporate Affairs Commission.”

The Board in the explanatory notes to seek approval and support of shareholders said the exercise would strengthen the bank and keep it ahead of competitors.

“The Bank is on a strong growth trajectory and requires additional capital for increased profitability, expansion (domestic and international) and enhancement of its digital capabilities. Advances in technology, the rapid evolution of the business of banking and changes in the operating landscape make it imperative that the Bank remains agile, adaptable and properly positioned to respond appropriately to developments, whilst remaining a competitive and forward looking institution.

“The proposed resolutions are aimed at ensuring that your company can take advantage of emerging business opportunities and secure long term profitability and competitive advantage, while ensuring increased shareholder value.

“It is against this background that the resolutions proposed for adoption at this Extra Ordinary General meeting are being presented for shareholders’ approval,” it explained.