Fidelity Bank Extends Rights Issue and Public Offer Amid Low Appetite For Equities

Fidelity Bank Plc has extended by Fourteen (14) days the trading in its Rights Issue and Offer for subscription of the bank’ shares, amid concern of low subscription due to high interest rates that favor fixed income investments and competition from other bank offers.

“It’s likely they have not gotten as much subscription as they would like to see to ensure the success of the Offer and meet the recapitalisation objective of the Board. Whilst the market is liquid, the high interest rate environment, with compelling yields on relatively low-risk fixed income instruments, including those issued by sovereign and high-investment grade corporates like Dangote Cement, is crowding out investment flows into the equity Offers,” Abiola Rasaq, financial analyst and former head, Investor Relations at UBA Plc, told MoneyCentral.

“It’s also expected that with Offers from GTBank and Access Bank at same time and expectation of opening Offers from other banks in the near term, the competition for investment flows is intense at this time, so extending the Offer to ensure more existing shareholders are able to take up their Rights and new investors are able to participate in the Public Offer is the right thing to do. It’s all about ensuring the success of the Offer.”

Nigerian Banking Index has returned -7.17 percent year-to-date, underperforming the broad NGX Al Share Index which is up 31.24 percent year-to-date.

Fidelity Bank’s Rights Issue of 3,200,000,000 ordinary shares of 50 Kobo each at N9.25 per share, on the basis of One (1) new ordinary share for every existing ten (10) ordinary shares held as at the close of business on Friday, 05 January 2024 and Offer for Subscription of 10,000,000,000 ordinary shares of N9.75 per share opened on, Thursday, 20 June 2024 was supposed to close today Monday July 29, 2024.

However, Fidelity Bank has obtained the approval of the Securities and Exchange Commission’s (SEC) to extend the combined offers by fourteen (14) days.

Consequently, trading in Fidelity Bank’s Rights will now close on Monday, 12 August 2024.

The Central Bank of Nigeria (CBN) sold N258.4 billion ($163 million) of one-year Treasury bills last week at a record high yield of 22.1%, as investor bids amounted to 1.37 times the amount of the securities on offer.

Nigerian Treasury bills were auctioned on Wednesday, a day after the central bank raised interest rates again in a bid to tackle inflation and support the nation’s currency.

The central bank on Tuesday raised its benchmark interest rate by 50 basis points to 26.75% and pledged to rein in price pressures that are at a 28-year high.