GTCO to Raise More Capital as N400bn Planned Public Offer is Undersubscribed
- With a 48% undersubscription, the Guaranty Trust Holding Company Plc raised roughly N209.01 billion from its N400.5 billion IPO
- The N191.09 billion deficit has been attributed to several factors, such as the N44.50 share price and the absence of a rights issue
- On the Nigerian Exchange Limited, GTCO made 9 billion common shares available for subscription at a price of N44.50 each
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
The Guaranty Trust Holding Company Plc (GTCO) raised about N209.01 billion from their N400.5 billion public offering, demonstrating a 48% undersubscription.
Source: Getty Images
A number of issues, including the share price of N44.50 per share and the lack of a rights issue, have been blamed for the N191.09 billion shortfall.
GTCO offered 9 billion ordinary shares on the Nigerian Exchange Limited (NGX) for subscription at a price of N44.50 per share, each worth 50 kobo. 130,617 valid applications for 4,705,800,290 shares were received in response to the offer, resulting in a 52% subscription rate overall.
Despite the shortfall, GTCO positioned the exercise as a key milestone for the group's future expansion plans by describing it as the first tranche of its equity capital raise program.
It further stated that the Securities and Exchange Commission (SEC) approved the Basis of Allotment of the Offer, and the Central Bank of Nigeria (CBN) finished the capital verification exercise.
The Group Chief Executive Officer of GTCO, Segun Agbaje, in a statement, said,
“We extend our sincere appreciation to our new and existing shareholders, as well as the regulatory authorities, for their unwavering support during this initial phase of our equity capital raise.”
He added,
“The strong participation and successful capital verification exercise and allotment process reaffirm the confidence investors have in our fundamentals and execution capabilities. This sets a solid foundation for accelerating our strategic roadmap, which aims to pivot the Group for transformational growth and unlock greater value across the Group’s Banking and Non-Banking businesses.”
By the time the bank's capital-raising campaign ended in August 2024, its stock price was trading on the Exchange at more than N45.00 a share.
Stakeholders in the capital market claim that this increased price deterred fresh investors from taking part in the public offering.
According to a trustworthy shareholder, the pricing did not appeal to prospective investors because it was a public offer with a higher price tag. The shareholder emphasized that current shareholders might have been able to exercise their rights under a hybrid offer.
ThisDay reported that to allow for greater investor engagement, companies such as Access Holdings and FCMB Group, which have documented successful capital-raising activities in the Nigerian capital market, prolonged their rights issue or public offer by one or two weeks.
Access Holdings announced in a regulatory filing at the NGX that it has successfully raised the target sum of N351 billion by obtaining full regulatory approvals from the CBN and the SEC for its recently completed rights issuance of 17.77 billion ordinary shares of 50 kobo each at N19.75 per share.
The FCMB Group declared that it had successfully raised around N147.5 billion from the investing public through its public offering, while Access Holdings had raised N350.96 billion to meet the CBN's new minimum capital requirement of N500 billion.
Additionally, Fidelity Bank Plc, FBN Holdings Plc, and Zenith Bank Plc expanded their capital-raising activities in an effort to draw in additional investors to exercise their rights.
The management of GTCO turned down the chance to extend its N400.5 billion public offer, and in 2025, they want to return to the stock market to acquire further funds.
The bank stated that the proceeds from the combined equity raise will be used strategically to recapitalize Guaranty Trust Bank Limited (GTBank Nigeria), the group's flagship subsidiary, improving its capacity to comply with regulatory standards and further establishing it as a preeminent financial institution.
Nigerian Bank Smashes Record
Legit.ng reported that the Nigerian Exchange Group (NGX) and the London Stock Exchange (LSE) have received the audited consolidated and separate financial statements for the period ending June 30, 2024, from Guaranty Trust Holding Company Plc (GTCO).
The group became the first financial institution in Nigeria to surpass the N1 trillion profit threshold when it announced profit before taxes of N1.004 trillion.
With this milestone result, the N327.4 trillion recorded in the equivalent period ending in June 2023 has increased by 206.6%.
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Source: Legit.ng
