Investors Asking for Repeat of ‘FBNH’ in Other Banks -Kurfi
- Undervalued stocks to See ‘Outsider’ Investors Incursion –Analysts
- Shareholders Have Learnt Their Lessons – Asimiyu, Afrinvest
- It is a well-orchestrated strategy – Stockbrokers
- Development is Good for the Market, Shareholders and FBNH – APT Securities
- Mandatory Tender Would Have Lifted Share Price Much Higher –Ademuwagun, ValueAlliance
Following 5.07% of FBN Holdings shares mopped up from the Nigerian Exchange, APT Securities Chief Executive Kasimu Garba Kurfi told MarketForces Africa that investors have started to ask if his firm can replicate the share purchase approach in other banks.
APT Securities and Funds Limited was instrumental to massive shares acquisition from the Nigerian Exchange trading floor for the billionaire investors Femi Otedola, the Chairman of Geregu Energy group.
Today, Kurfi hinted about a strategic incursion from influential investors in reaction to MarketForces Africa enquiry as to if Otedola’s factor would have bearing on the future of FBN Holding Plc.
Some analysts have predicted that the billionaire investor recent foray into the banking sector will fuel outsiders’ incursion in a short term.
“There would be an incursion of outsiders’ investors taking up shares in some undervalued banking stocks following a well-orchestrated move by Otedola”, a stockbroker who pleaded anonymity told MarketForces Africa.
Outsiders, according to analysts are Nigerian billionaires’ investors without significant influence in the banking space, saying they could start building interest.
Kurfi, the man behind APT Securities and Funds said the whole scenario is good for the market, adding that other people can also give a trial to other Banks. “As I am talking to you others are talking to me if we can repeat same in other Banks”, he said.
But some numbers crunchers think a new lesson has been learnt for shareholders that offloaded their holdings consistently, saying it would take years to see this kind of ‘maradonic’ game at play on the local bourse.
Some hawks have started watching closely the Nigerian market slowly now to make a similar move since investors could pull that amount from the open market without mandatory tender could be a new normal.
‘It is unusual, albeit, strategic’, according to various analysts that spoke with MarketForces Africa on whether 5% of a listed company can be acquired without tender.
At the early in the year, FBNH share was traded at N7.30 and has jumped to N12.25 at the end of the trading session on Friday amidst increased demand. Experts said significant shares purchase would have ordinarily required a mandatory tender to minority shareholders.
With mandatory tender, the expectation would have been a catalyst for the stock to rise above the current, according to Yinka Ademuwagun, an analyst at ValueAlliance Asset Management Limited.
“Otedola might eventually become the chairman of FBNH”, some analysts said, adding that Geregu founder and the then Forte Oil Chief is an astute businessman that has grown and exited businesses successfully.
Based on time taken mopping up 5.07% from more than 35 billion outstanding shares from local bourse without a tender as required by Investment Securities Act, Otedola move appears to be pre-determined and calculated to take an influential seat on the FBNH board room.
MarketForces Africa gathered that before now, Mr. Otedola interest has been in the real estate, energy, oil and gas sector including investment in the petrochemical industry.
In a letter to the Chairman of FBN Holdings, Otedola said efforts were ongoing to consolidate shares held in the accounts of other indirect and nominee accounts, which would be made public soon.
He also hinted about its $30 million the bank’s long-term debt instrument. Reacting to whether Otedola’s positioning in FBN Holdings would make a difference on the brand in the coming years, analysts however offered different insight on the development.
With the 5.07% of FBNH shares purchased from the local bourse and previous interests, Otedola, Oba Otudeko, Tunde Hassan-Odukale and Globacom Chairman Mike Adenuga are now the largest shareholders in their individual capacity.
MarketForces Africa gathered that Adenuga has between 5 to 7%, Odukale 5.36%, according to the latest disclosure to the Corporate Affairs Commission and Otudeko is said to own more than 5% shares in the group.
Meanwhile, as part of disclosure requirements for listed entities, FBNH had in the first half of the financial year 2021 reported that the group free float as at the end of the period was 99.7%.
Noting the scarcity of facts about the real ownership structure, Broadstreet sources affirmed that Otedola doesn’t play second fiddle in investment games historically, adding that its foray into the space was predetermined.
“When his other shareholdings from other accounts come together, he is more likely to take the biggest cut in FBNH”.
“Significant shareholding starts when an entity holds approximately 20% to 50% of a company’s stock”, Ademuwagun told MarketForces Africa.
Staying on the side of prediction, analysts’ prediction that Otedola interest in the banking sector would fuel outsider incursion into undervalued sectors could be positive for the Nigerian market due to valuation difference.
But, there is a general feeling that the most attractive sector would probably see a flood of money bags flowing into the banking sector which is currently valued below peers in the emerging market.
“Once companies release their audited financial statements for 2021 in the sector of interest, be expecting strong acquisition via on open market to make headlines”, said an investment banking expert not authorised to speak to media.
The general feel among stockbrokers and analysts is that low stock valuation in the banking sector could drive further interest among the Nigerian billionaire investors.
Otedola’s influence is expected to bear on the strategic and operational direction of Nigeria’s oldest lender which could keep the share price on a positive trajectory as the market maintains its new valuation.
“Otedola has taught Nigerian billionaires simple way to buy Nigerian banks cheap”, analysts told MarketForces Africa, albeit jokingly but the message has already been passed.
Cheap valuation on the local bourse for listed companies avails investors to take the bigger opportunities, not only in the banking sector but across the corporate spectrum.
In his acknowledgement letter titled: ‘Interest in First Bank Holdings Plc,’ read: “Pursuant to the notice of substantial shareholding tendered by my Stockbrokers, APT securities Limited and dated 22/10/2021, it is pertinent to state that we are in the process of consolidating shares held in the accounts of other indirect and nominee accounts and this will be forwarded in due course.
“In addition to the above, I also invested the sum of $30 million in the bank’s long term debt instrument and which constitutes a significant portion of the bank’s capital base.”
In a chat with MarketForces Africa, Stockbroking firm Chief, Bosun Adekoya said typically part of the requirements for a transaction of this nature is the purpose of the acquisition which at the moment is unclear…”
Macroeconomic Strategist and analyst at Afrinvest Limited, Damilare Asimiyu said, “I’m less surprised knowing that billionaire, Otedola, has secured his way to becoming a major shareholder of FBNH. He’s not a novice in the Nigerian business environment, maybe the only thing new is that he’s shifting interest to the banking sector for the first time”.
“Personally, I believe the billionaire has a vision and transmission plan for Nigeria’s oldest lender. I believe that is what encouraged him to dole out such a huge fortune.
Asimiyu said perhaps, FBNH really needed a visionary leader like him to get back on track for optimum performance.
“And with the CBN’s sustained push to clean up the bank’s backlog of NPL and weak Capital Level, this latest development would have a positive impact on the bank’s status and valuation in the near term”, he added.
Reacting to how Otedola’s influence would bear upon FBNH, Managing Director & Chief Executive, APT Securities and Funds limited Kasimu Garba told MarketForces Africa said he has already had a serious impact on FBN Holdings.
Garba said based on price movement, FBNH has been trading with the price of N7.50 or even less because at a time it’s was trading less than #3.00. He noted that with the acquisition, its share price has moved to double-digit gain to #12.25 or about 60% which benefit the current shareholders whose value have increased.
Secondly, the total market capitalization of FBNH has increased by the same proportion which now put the company among the top ten companies by capitalization in the NGX which is good for the companies.
It added that other shareholders will now try to acquire more so that they will be relevant in the affairs of the Bank. “He (Otedola) did not carry burdens to the Bank in term related party loans as we witnessed before”, Garba said.
The whole scenario is good for the market, APT CEO added, saying that other people can also give a trial to other Banks. As I am talking to you others are talking to me if we can repeat same in other Banks, Garba said.
Afrinvest’s analyst Asimiyu said, “I think it might take some years before we see this kind of acquisition strategy at play again. The process was well orchestrated that some of the people who sold their stake might not have envisaged the outcome”.
So, current shareholders of banks would have taken a lesson from this, and would guard against this kind of strategic mop-up in the near term, he said. #Investors Asking for Repeat of ‘FBNH’ in Other Banks -Kurfi
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