GIVING the successful conclusion of Unity Bank rights issues, expectations were high among investors for the financial results of the company for the half-year ended June 30, 2014.
The Managing Director of the bank, Henry James Semenitari had in the banks, extra-ordinary general meeting held recently, expressed its optimism that the robust strategic plans put in place by the board and the success of the capital raise will put the bank on a firm footing to compete effectively both locally and internationally.
Indeed, Unity Bank had in the last six months taking steps to re-invent and reposition itself within the Nigerian banking industry by re-invigorating its board and management with a well assembled team of experienced professionals, the dual capital raise, according to Semenitari would strengthen the bank by providing additional working capital and meeting the regulatory guidelines asset by the Central Bank of Nigeria (CBN).
Specifically, the shareholders of the band had at its EGM approved the bank’s plan to raise over N38 billion through special placements or rights issue.
They mandated the board and management of the bank to increase Unity Bank’s share capital from N30 billion to N60 billion. They also authorized the directors to raise additional capital through the issuance of 40 billion ordinary shares at 50k through special/private placements.
The shareholders authorized the directors to explore other steps such as mergers and acquisition or any other form of business combination for the purpose of raising capital.
They also endorsed that the 38.45 billion issued and fully paid ordinary shares of 50k in the capital of the bank be reconstructed into 9.61 billion ordinary shares of 50k.
The shareholders also approval the allotment of the new share for every four already held by existing investors. The offer, which closed in June this year was massively subscribed. Since then, Unity bank has moved from the brink of collapse to announcing a robust half.
Semenitari explained that primary purpose of the rights offer is to enable the bank to shore-up its
Capital Adequacy in compliance with the Central Bank of Nigeria (CBN) directive on Capital Adequacy for Banks in Nigeria on the new Prudential Guidelines.
The bank’s Capital Raise will improve the debt/equity mix, increase capacities for large ticket transactions, improve its information technology and expand its branch network. The estimated net proceeds of the Rights Offer estimated at about N18.7 billion after deducting the total costs of the Rights Offer estimated at N539,927,969.95 representing 2.81 per cent of the gross proceeds.
‘‘In the next three years, we believe that we will be first a dividend-paying institution. In three years, we should have begun to create a shareholder value both in terms of capital appreciation and dividend payment. Two, in three years, we should have achieved at least 70 per cent of our dream of being the retail bank of choice. It is a six-year horizon, we said 2020. But in three years, going with the quality of response from colleagues and the collective manner with which we are working, we should have achieve at least 60 per cent of our strategy objectives,” he declared.
Shareholders of Unity Bank had at the EGM approved the bank’s plan to raise over N38 billion through special placements or rights issue.
According to him, ‘‘Strategically, our vision as an institution is to be the retail bank of choice in the next five years. Now, why retail bank of choice? Why not say number one, number two or three? It is not a game of who is first, but it is a game of who is preferred. It is game of who has the right, solid proposition. Now, what the derivatives of being the retail bank of choice in five years? Our strategies are strictly in three folds. First, the main derivative is leveraging on a very strong network across the country. We are looking at networks in excess of 240 branches coming from an amalgamation of nine institutions that are pretty very active in their own right and in their chosen business of strategy spread across Nigeria.
And also leveraging on the strong personalities that make up the board of directors as well as the quality of manpower that exists, they are what drives our proposition of aspiring to be the retail bank of choice in five years. We are targeting small and medium-sized business (SMEs); that takes you to local content, emerging middle market businesses.
He added that the bank’s strategy will offer SMEs an opportunity to grow their businesses and generate employment.
He said: “We have the value proposition and the product offerings. When you are dealing with SMEs, it is an unstructured trade, family businesses that grow from generation to generation. There are businesses that have no defined stream of cash flow, or an organized board of directors that meet quarterly or do AGMs, but they are running. Aliko Dangote today has become an organized corporate, but he started as a retailer. He started at the railway terminal. When you talk of rice, he was just a retailer, later got a kiosk, then he was just on distributive trade.
‘‘So our proposition focuses on SMEs, start-ups and mature businesses, it is all about understanding the chain of the business. It doesn’t take away the fact that we also do corporate banking. Two, on the agriculture side, we have a defined agric desk. We have just recruited somebody who comes with a strong skill set in the UN to man our agric desk. He is yet to resume, but we have a team dedicated strictly for agriculture, leveraging on the potential we are having presently,” he said.
Semenitari, said the bank’s would also focus on the rural economy. “By rural economy, we mean leveraging our presence historically that was modeled around urban-rural drift. The essence of taking the economy to the last tiers of governance is to bridge the urban-rural economy. Post Bank in South Africa is the bank with the highest local dwelling settlements in the African continent. About 70 per cent of its revenues come from rural economy.
‘‘Today, it is also competing with the cosmopolitan cities of Durba, Port Elizabeth, Johannesburg, with Rand Bank, Stanbic. In the rural economy, it has no competitor. So for rural economy, we are a preferred choice as an institution, leveraging on our history. We have two local franchises. Those franchises are not just driving us in the cosmopolitan city, but located us in very strong local economies that today are flourishing if properly harnessed.
The Unity Bank boss boasted that what people see as a weak economy is a strength for Nigeria adding that the bank is leveraging on it to enhance its spread in the country.
With the completion of its right issue and special placement exercise, the bank, on Wednesday, listed supplementary shares of 78.45 billion ordinary shares of 50 kobo on the Nigerian Stock Exchange (NSE).
Semenitari, while addressing stockbrokers on the Nigerian Stock Exchange, explained that listing brought the total outstanding share in issue of the bank to 116.90 billion ordinary shares of 50 kobo. He added that the rights issue was oversubscribed in excess of N950million.
He pointed out that the bank would embarked on share reconstruction due to large outstanding shares of the bank, adding that the exercise would add value to shareholders investment.
“We are definitely going to do share reconstruction; we would have an Annual General Meeting approval for that. So, in a very short while that will be done, considering the number of shares on issue in the market that will definitely be done in the interest of shareholders.
Rights issue
He said the rights issue went across the shareholders of the bank., noting that the entire rights were taken by local investors, without the participation of foreign investors.
Semenitari added that this is a good step in the history of the bank, adding that with the support of the stockbroking community the bank would moved from being a penny stock to a pound stock. He also stressed that the bank’s capital adequacy ratio was in compliance with regulatory guidelines, while assuring the stockbroking community that the bank would work closely with stock brokers going forward so that they would be better equipped to deal with enquiries about the bank.
The bank released its third quarter result for the period ended September 30, 2014, showed a profit after tax of N11.05 billion appreciating by 856.83 percent from N1.15 billion in 2013.
Reacting on performance, the managing director of APT securities and Funds Limited, Garuba Kurfi said, “the bank has a bright future looking at the third quarter result recently released.”
“With the capital raise and the debt recovering undergoing by the bank, and with the bank’s result so far, the bank may likely reward its shareholder in the next two years,” he noted.
Culled from http://www.ngrguardiannews.com/business
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