Fidelity Bank Share Price Dips N32.01bn Amid Capital Raising Plan

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The share price of Fidelity Bank Plc depreciated by N32.01 billion a week after the management announced plans to raise  N127 billion through a public offer, and rights issue.

The share price of Fidelity Bank opened for trading in June 2024 at N10.20 per share, dropped by N1.00 or 9.8 per cent to close last week at N9.20 per share on the floor of the Nigerian Exchange Limited (NGX).

This means that the investors in the strong Tier-2 bank lost N32.01 billion of their investment as investor sentiment rocked its prices on the Exchange.

The share price in the first week of trading in June reached a peak of N10.8 per share and closed the new month at N9.20 per share, the lowest price since the management announced the capital raising exercise.

Capital market analysts told InsideBusinessNG that the bank is closely monitoring the price depreciation, stressing that the market mechanism would find its way to ensure the share price on NGX traded above N10.00 per share.

“Naturally, no company will want to make their primary market price higher than the market price. This means that the decline in the share price of Fidelity Bank will not last. By Monday, by crook and any means, the price has to increase above N10.00 per share.

“The price above N10.00 per share will encourage the bank’s shareholders to buy into the rights issue. When the price at the secondary market is lower, it means shareholders will prefer buying at the secondary market which is not good for the bank,” he said.

“Mind you, the offer has not officially opened and the share price may swing anytime,” he added.

The bank said its board approved that N29.6 billion would be raised through rights issues, while N97.5 billion would come from a public offer.

“The combined offer is a part of the Bank’s strategy to increase its share capital base in compliance with the revised minimum capital requirements for Nigerian commercial banks introduced by the CBN on 28 March 2024,” the statement reads.

“Overall, the Bank expects that the capital raised would support the Bank’s efforts to drive sustained growth and diversification of its earnings base.

“Under the rights issue, 3,200,000,000 ordinary shares of 50 kobo each will be offered in the ratio of 1 new ordinary share for every 10 ordinary shares held as of 05 January 2024, at N9.25 per share.

“For the public offer, 10,000,000,000 ordinary shares of 50 kobo each will be offered to the general investing public at N9.75 per share.

On March 29, the CBN announced an upward review of the minimum capital requirements for commercial, merchant and non-interest banks.

Under the recapitalisation programme, Fidelity Bank requires N370.70 billion to meet the N500 billion requirement, as its capital base stands at N129.71 billion, according to its unaudited first quarter (Q1) financial statement.