business
Stanbic IBTC Allocates Rights Issue Proceeds
Stanbic IBTC Holdings Plc recently announced that it would allocate 96.3% of its N148.71 billion rights issue proceeds to its banking subsidiary.
The rights issue allows existing shareholders to subscribe to 2,944,772,083 ordinary shares of 50 kobo each at N50.50 per share, structured as five (5) new shares for every twenty-two (22) ordinary shares held as of October 29, 2024.
During the company’s ‘Facts Behind the Issue’ presentation in Lagos, Acting CEO Kunle Adedeji revealed that 42% of the funds will be directed towards Corporate and Investment Banking (CIB) to boost lending to sectors such as manufacturing, power, agriculture, and telecommunications.
He emphasized that this allocation aligns with the Group’s strategy to support industries critical to Nigeria’s economic development.
Adedeji stated, “Our plan is to channel resources into sectors that have the capacity to catalyze sustainable growth in the Nigerian economy. The financial sector is a critical aspect of actualizing Nigeria’s target of $1 trillion economy.”
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Additionally, 27% of the proceeds will support Business and Commercial Banking (BCB), facilitating the growth of commercial enterprises and SMEs, particularly in the general commerce sector. “Personal and Private Banking (PPB) will account for 11% of the funds, enhancing credit accessibility for individual clients and improving their financial wellbeing,” stated Adedeji.
Beyond lending, Stanbic IBTC plans to use 2.22% of the proceeds to expand its distribution network by establishing ‘iconic’ electronic and green-rated branches, ensuring broader access to its services. Furthermore, 14.11% will be invested in IT infrastructure upgrades, including the modernization of cyber and information security systems. The Company stressed that this investment will enhance operational efficiency and ensure the resilience of the group’s technological platforms. “We are committed to deploying best-in-class systems to support our clients and secure their transactions,” Adedeji added.
The rights issue follows Stanbic IBTC’s strong financial performance for the nine months ended September 2024, during which the group recorded a 95% year-on-year increase in gross earnings to N650 billion and a 67% rise in profit after tax. Key metrics, including a 43% return on equity, a capital adequacy ratio of 15.7% and a non-performing loan ratio of 3.2% underscored the group’s operational strength and prudent risk management. Highlighting its track record of delivering shareholder value, Stanbic IBTC achieved an average annual return of 27% between 2019 and 2023, alongside a dividend payout ratio of 54%.
CEO of Stanbic IBTC Bank, Wole Adeniyi, expressed confidence in the offer, describing it as a pivotal move to consolidate the group’s leadership in Nigeria’s financial sector. “This robust performance provides existing shareholders with an attractive opportunity to increase their equity stake through the rights issue,” Adeniyi said, urging shareholders to take up their rights.
The CEO of NGX Limited, Jude Chiemeka, while commending Stanbic IBTC on the offer, urged more listed corporates to take advantage of the Exchange for capital formation, emphasizing its role in supporting economic development. “Listed companies are not only better positioned to access capital for growth but also demonstrate higher levels of transparency and tax compliance, which significantly benefits the economy,” Chiemeka stated.
He further highlighted the success of several companies that have leveraged the NGX platform. “Across sectors like manufacturing, telecommunications, and agriculture, businesses have utilized the Exchange to raise the capital required to expand operations, innovate, and remain competitive. This has reinforced the critical role of the capital market in fostering sustainable economic growth,” he added.
