FBNH Halts Uptrend, Loses 22% to Market Correction
Reversing the previous trend, FBN Holdings plc saw a significant market valuation loss of 22% in a week after the group announced large shares purchase by Honeywell Group Plc.
Betting large on the Holdco, Oba Otudeko, who was a former chairman of FBN Holdings, and chairman of the food producing company pushed shareholdings to 14.8%. This has drawn negative attention as Ecobank confronted FBNH not to ratify the acquisition over judgment debt worth N13.5 billion owed by Otudeko.
Ahead of its second quarter of 2023 earnings release, equities investors now value FBN Holdings Plc for N565.15 billion in the stock market The financial services company has been making an uptrend in the local bourse, reaching its peak of N800 billion in market valuation.
According to market analysts, Otudeko go for the jugular with 14.8% shareholding after its associated pumped billions of naira into what analysts call a hostile acquisition. It is not clear whether FBNH has a legal right to decline Otudeko’s right to the boardroom as the largest single shareholder.
However, the apex bank has issued a new guideline to guide the activities of banks, shareholders, and related party transactions. It now requires large shares acquisition to pass through its watch for approval.
“Otudeko appears to have a score to settle as an influential shareholder, that explains why such a large amount was pumped into FBNH”, analysts told MarketForces Africa.
Recall that two years ago, Otudeko was asked to leave FBNH as chairman along with other board members at the instance of the Central Bank intervention in the broad daylight boardroom coup.
FBN Holdings’ then chairman and others had forced Dr. Sola Adeduntan to resign as chief executive of First Bank of Nigeria Limited before the regulator wielded its big stick.
Before then, FBNH’s market valuation was less than N250 billion. When Femi Otedola acquired a majority share, the bank surged to N4440 billion. It was trading around this level before it began to make a fresh journey above N500 billion, N600 billion, N700 billion, and then N800 billion.
To some analysts, the financial services holding company has no market fundamental to carry its valuation weight. Analysts told MarketForces Africa that FBNH is among local lenders ring-fenced by the apex bank over capital shortage.
FBNH had embarked on balance sheet cleaning efforts to boost its market position after a load of legacy loans. Having resolved its legacy asset challenges, FBNH bolstered its profit in 2021. However, there was a downturn in its earnings performance in 2022.
Though, the group’s earnings resurge in the first quarter of 2023, driven by improved credit creation among other business lines.#FBNH Halts Uptrend, Loses 22% to Market Correction Nigerian Treasury Bills Yield Rises to 7%
