FBN Holdings: Why You Should Part of the Show
A lifeline from a financial behemoth, maybe. FBN Holdings Plc’s share price could surge to N1 trillion if its current largest shareholders fight back by intensifying share purchases from the local bourse. The group has seen about 90% year-to-date return in 2023 already.
Shareholders with no significant influence will rightly benefit from the next boardroom fight. Oba Otudeko, not so loved, has agenda for coming back to play big after he was ousted unceremoniously last time.
The infighting among board members triggered Femi Otedola’s ‘maradonic’ entry into the elephant house. Don’t forget, the billionaire investors recently lost a fight against the Elumelus over Transcorp Plc share acquisition he later sold.
This time around, Oba came with full force. The size of his stake is so loud and intimidating. The question is: Why is Otudeko coming back? Cheap insider loan? FBN earnings quality or special market advantage? Or what? In all its business journey, Otedola never plays second fiddle.
Would he start now?
One of these two things will happen: Otedola may sell down or he fight dirty with more shares acquisition. When FBN Holdings had its first boardroom coup, its market valuation was less than N250 billion.
Otedola, a billionaire with strategic foresight, moved in and the market price has surged in multiple. As the Nigerian Exchange hits 23% year-to-date return, Otedola will not worry about the inflation rate that has reduced the purchasing power of the naira.
MarketForces Africa has been tracking key indices in the financial markets and we keep giving you possible signals from investment banking analysts’ notes, the economy, and stock market direction.
In the financial year 2023, FBN Holdings may deliver a 100% return because the fight will continue at the boardroom level. Why do we think so?
Otedola will not like to play second fiddle and Otudeko is out for blood looking at significant share acquisition – and it takes 26 companies to deliver. One of two things will happen Otedola will sell down or face the ‘coup-de-tat’ head square. I see him doing the latter than the former.
Why? He will be seeing a chickening out after Transcorp Plc mess with Tony Elumelu. If it takes time for Otedola to find his way to the top, it is to the non-controlling interest’s advantage. Minority shareholders should expect more buying than selling rallies.
Why do you think these billionaires are drawing blood over FBNH really?
They are business people with a need for capital to run their empires. Whenever we look at FBN Holdings’ financials, what we are looking for first is the size of insider loans.
A bit of explanation about insider loans is that they are usually priced below market rates. Despite rising interest in the financial services group ring-fenced by the apex bank due to its narrow capital adequacy ratio that takes longer to resolve, FBN Holdings Tier-1 capital ranks lower among its peers.
Take it to the bank, FBNH will always be protected. For obvious reasons, the apex bank classified the oldest elephants in the financial service bush as one of the Systemically Important Banks.
Indirectly, the Central Bank of Nigeria is saying there are ‘sacred’ goats you cannot eat for dinner.
Nigeria as a country will find it difficult to allow FBNH to go down, so it must be ring-fenced as it has always been. In the last few years, FBNH has been able to do some balance sheet repair that helps its earnings pop higher than previously seen.
As of Friday’s close, the group ranked third in the tier-1 class and would more likely join the trillion naira valuation group – if the ‘influencers’ keep at their games at the boardroom level. Take position, who knows how long the fight among the billionaires will last? #FBN Holdings: Why You Should Part of the Show#
