business
FBN: Shareholders Support Otedola’s Reforms, Call Extraordinary General Meeting Unnecessary
The ongoing debate among FBN Holdings Plc shareholders regarding the proposed N350 billion private placement has sparked discussions on corporate governance and transparency.
However, some shareholders have voiced strong support for the reforms under the leadership of Chairman Femi Otedola, dismissing calls for an extraordinary general meeting (EGM) as unnecessary.
Matthew Akinlade, the immediate past president of the Noble Shareholders Solidarity Association, spoke to our correspondent on Thursday, expressing that some protests by shareholders are influenced by external interests. He emphasized that Otedola’s efforts are in the best interest of the bank, stating, “I believe some of these shareholders protesting are being used, and unfortunately, people are willing to be manipulated. Otedola has been driving positive changes within FBN Holdings, and this is a bank that, in the past, paid peanuts as dividends. Now, with the bank’s improved performance, the situation is different.”
While Akinlade fully supports Otedola’s leadership, he raised concerns about the method of capital raising, calling for a more inclusive process. He stated, “Private placement should not be the first option. A public offer or rights issue would be more equitable, giving every shareholder an opportunity to invest. While I understand the need for raising funds, the board must ensure that the process is inclusive and transparent.”
Bisi Bakare, the National Coordinator of the Pragmatic Shareholders Association of Nigeria, also weighed in, defending the private placement as long as it complies with legal and regulatory standards. He said, “When I look at this issue of private placement, I do not see why there is such a fuss. If you have your money and the process is legal, then why not? The key question should be whether the source of funds is legitimate. If the Securities and Exchange Commission and Central Bank of Nigeria approve it, then there’s no issue.”
Boniface Okezie, the National Coordinator of the Progressive Shareholders Association of Nigeria, echoed similar views but expressed concerns over transparency and the potential abuse of corporate governance. He noted, “If the private placement was part of the agenda approved during the last Annual General Meeting, then there is nothing fundamentally wrong. The board promised to raise capital through the market, and they are simply following through.” However, Okezie emphasized the need for transparency, cautioning that the private placement should not be directed toward a select group. He warned, “If this private placement is targeted at one individual or a small group, it could lead to an abuse of corporate governance, which would raise red flags with the Central Bank of Nigeria.”
Okezie reiterated that the private placement aligns with the resolutions passed during the last AGM and called on the Central Bank of Nigeria to clarify the situation. He said, “If the private placement was indeed part of the AGM resolutions, there’s no justification for this controversy. The CBN, as the regulator, must clarify the situation for transparency and stakeholder confidence.”
In a statement filed by company secretary Adewale Arogundade with the Nigeria Exchange Limited on Thursday, FBN Holdings reassured stakeholders that the ongoing developments would not impact its operations. The company emphasized that all businesses under its umbrella continue to offer uninterrupted services to customers.
The statement further assured investors, shareholders, and the public that FBN Holdings is taking measures to protect its interests and those of its subsidiaries. It highlighted the group’s continued performance improvement, which has led to a higher market capitalization, and assured that it is on track to meet regulatory minimum capital requirements ahead of schedule.
Arogundade concluded by reaffirming FBN Holdings’ commitment to corporate governance, ensuring that management and subsidiaries operate with the highest standards of transparency and accountability.
FBN Holdings Plc has also opened a rights issue, offering 5.983 billion ordinary shares at 50k each to existing shareholders at N25 per share, aiming to raise N150 billion in additional capital.
Background
FBN Holdings Plc, the parent company of First Bank of Nigeria, decided to raise additional capital to strengthen its financial position and support its growth plans. The company proposed a private placement to raise N350 billion. A private placement is a way for a company to raise money by selling shares directly to a select group of investors, rather than through a public offering.
The Proposal
The proposal to raise N350 billion through private placement was approved during the company’s Annual General Meeting (AGM). The idea was to issue new shares to specific investors, which would bring in the needed funds. This move was seen as a way to quickly raise capital without going through the lengthy process of a public offering.
Shareholders’ Reactions
The proposal sparked a debate among shareholders. Some shareholders supported the move, believing it would help the company grow and improve its financial stability. They trusted the leadership of Femi Otedola, the Chairman of FBN Holdings, and felt that his reforms were in the best interest of the company.
However, other shareholders were concerned about the transparency and fairness of the process. They argued that a private placement might favor a select group of investors and exclude others. They called for a more inclusive approach, such as a public offer or rights issue, which would allow all shareholders to participate.
Key Concerns
- Transparency: Some shareholders worried that the private placement might not be transparent and could lead to corporate governance issues. They wanted assurance that the process would be fair and open to scrutiny.
- Inclusivity: There were calls for a more inclusive method of raising capital. Shareholders argued that a public offer or rights issue would give every shareholder an opportunity to invest, rather than limiting it to a select few.
- Regulatory Approval: Supporters of the private placement emphasized that as long as the process complied with legal and regulatory standards, there should be no issue. They pointed out that the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) would need to approve the private placement.
Current Status
As of now, the debate continues, with shareholders divided on the best approach. FBN Holdings has reassured stakeholders that the ongoing developments will not impact its operations and that it is committed to maintaining high standards of corporate governance.