Board Appointment in FBN Holdings: As Otedola Keeps Eyes on the Ball

CAPITAL MARKET

Last week, FBN Holdings Plc announced the appointment of a non-Executive Director to strengthen the board. However, capital market analysts believe the appointment of Mr Julius B. Omodayo-Owotuga, a Deputy Chief Executive of Femi Otedola’s Geregu Power Plc, is an indication that the single largest investor in the holding company is ready to keep his eyes on the ball, reports Festus Akanbi

For the board and management of Nigeria’s oldest banking institution, housed in a holding company, First Bank Holdings Plc, there is no looking back at the resolve to take advantage of the rising appetite of strategic investors in the shareholding of the company.

What began as a stealthy competition for the controlling shareholding of the FBN Holdings blew into the open in October last year when it became a duel between billionaire investor and Chairman of Geregu Energy Group, Mr Femi Otedola and the Chairman of First Bank Limited, Mr Tunde Hassan-Odukale.

The issue was however laid to rest when a letter of notification addressed to the bank by Otedola, which was leaked to the press, put the billionaire investor ahead of Hassan-Odukale in terms of the volume of shares held in the company.

In the letter, Otedola informed the bank that he has now acquired 7.57% ownership in the bank, “I have recently acquired additional shares in FBN Holdings Plc (the Company), which has brought my total stake to 7.57% per cent of the issued shares capital of the company.”

Otedola’s earlier move spurred Mr Hassan-Odukale to swiftly lay claim to 5.36 per cent shareholding in the Holdco in what he called “cumulative equity stake” drawn from a combination of his direct, indirect and related party shareholding in the group.

Days after, the board of FBN Holdings issued a letter to the Corporate Affairs Commission, notifying Hassan-Odukale’s “5.36 per cent” cumulative stake and other related details. A claim that was punctured by the clarifications by the National Pension Commission that the shareholding of Leadway Pensure PFA in First Banking Holding belongs to retirement savings account holders of the company and not Hassan-Odukale.

As the Dust Settles…

However, as the dust settles, Otedola, who recently upped his stake in FBH Holdings in a bid to firm up his position as its biggest shareholder, said he was not keen about holding a board position in the financial services group, its flagship unit First Bank Limited and any of its remaining subsidiaries.

The chair of Geregu Energy Group, days after news that he had scaled up his holding in FBN Holdings to 7.5 per cent broke, was quoted as saying that he did not acquire shares in FBN Holdings with the intent of becoming its chairman.

“I am simply an investor who saw an opportunity in the financial institution and decided to take advantage of it through the investment I have made.

“My interest, contrary to speculations is not to become chairman of the bank or its Holdco. Moreover, I am in semi-retirement.”

The Calculations

Given his reputation as a turnaround investor, shrewd businessman and a good manager of men, Otedola’s ascendancy in the First Bank corridor of power came with mixed feelings. To some other ‘heavyweight’ investors in the bank and some management staff, the current status of Otedola as the single largest shareholder was all he needed to take over the control of the board even if for one reason or the other he is not keen on contesting for the chairmanship position. This development, if it plays out, according to their expectations, would complement the anticipated turnaround measures already put in place in the company. But for how long would the serial investor be folding his hands with the excuse he is on a semi-retirement was the question posed by some watchers of the unfolding drama.

Formidable Representation

However, an indication that Otedola may have taken a concrete step to protect his interest in FBN Holdings played out last week with the appointment of Deputy Chief Executive of Geregu Power Plc and previously Group Executive Director, Finance and Risk Management of Forte Oil Plc (now Ardova Plc), Mr Julius B. Omodayo-Owotuga, as a Non-Executive Director of FBN Holding.

The appointment followed the approval of the Central Bank of Nigeria according to the notification sent by the company secretary to the Nigerian Exchange Limited (NGX).

It is a fact that no one can fault the competence of Omodayo-Owotuga, having distinguished himself as a finance expert with huge experience in finance, risk management, treasury, internal controls, general administration, procurement, and information technology.

It is also to his credit that while at Forte, he was a member of the Executive Management Team, “that restructured a then moribund company into a vibrant industry player. He equally led the capital restructuring, acquisitions, debt capital raise, maiden credit rating, and divestment initiatives.

Interestingly, the new appointment, which has since been ratified by the regulatory authorities, has rekindled the hope of those aspiring for a turnaround in the nation’s foremost bank.

“The investing public is not surprised by the latest appointment on the board of FBN Holdings. No one in his right sense will expect Otedola, who is today the largest single shareholder of the Holdco not to put his people on the board,” an investment analyst who craved anonymity told our correspondent.

According to him, Otedola’s declaration that he is in semi-retirement should not prevent him from stepping in whenever the company needs his experience as a wealth maker, manager of resources and an undisputable turnaround expert, saying the new director is simply a proxy of the billionaire investor.

He explained further that on the other hand, since Omodayo-Owotuga is just a non-executive director, it means he won’t be engaging in the day-to-day management of the organisation although he would be involved in policymaking and planning exercises. He pointed out that non-executive directors’ responsibilities include the monitoring of the executive directors and acting in the interest of the company’s stakeholders.

Analysts believe that whatever innovation Otedola wants to bring to bear in FBN Holdings can be done through his proxy. They, however, will not rule out the occasional clash of interests in the days to come as management and board are likely going to be divided along with the two major stakeholders in the bank.

Value Addition

A statement by FBN Holding said that regarding Omodayo-Owotuga, “He is a KPMG trained finance professional who possesses extensive investment experience spanning financial services, power and oil and gas sectors with a proven track record of significant achievements.

His two decades of work experience spans blue-chip companies such as KPMG, Standard Chartered Bank, Africa Finance Corporation (AFC), Forte Oil Plc, MBC International Bank (Now First Bank of Nigeria Limited), and Geregu Power Plc.

“JB is an alumnus of Oxford University’s Said Business School, United Kingdom, IE Business School, Madrid, Spain and the University of Lagos, Lagos, Nigeria. He has a B.Sc. in Accounting and a Masters in Business Administration (with distinction). He is a CFA Charter Holder; a Fellow of The Institute of Chartered Accountants of Nigeria (ICAN), The Chartered Institute of Taxation of Nigeria (CITN) and The Institute of Credit Administration.”

As of Wednesday, the share price of FBN Holdings Plc (FBNH) was N11.45. FBNH closed its last trading day (Wednesday, February 2, 2022) at N11.45 per share on the Nigerian Stock Exchange (NGX), recording a 0.9% gain over its previous closing price of 11.35 NGN.

FBN Holdings is the most traded stock on the Nigerian Stock Exchange over the past three months (Nov 3, 2021 – Feb 2, 2022). The Holdco has traded a total volume of 3.17 billion shares—in 12,995 deals—valued at N37.1 billion over the period, with an average of 50.4 million traded shares per session. A volume high of 442 million was achieved on December 8, 2021, and a low of 1.31 million on November 29 of the same year.

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