Strategic Benefits of Access Holdings’ Rights Issue for Investors

Kayode Tokede posits that the ongoing capital raising exercise by Access Holdings Plc would lead to significant growth in operations and create higher value for all shareholders

The Central Bank of Nigeria (CBN) on March 28, 2024, announced a two-year bank recapitalisation exercise, which commenced on April 1, 2024, and is expected to end on March 31, 2026. In line with this development, Access Holdings Plc, one of Nigeria’s largest financial institutions, had announced plans to raise a staggering N351 billion through a rights issue.

The company has a capital raising programme of $1.5 billion, planned to be executed via  equity, quasi-equity, and debt issuances. For investors, the capital raising presents an opportunity to expand the company’s earnings window and improve returns on investment.

For the right issue, Access Holdings is offering 17.772 billion ordinary shares of 50 kobo each to existing shareholders at N19.75 per share. The offer opened on Monday, July 8, 2024.

The offer period, which was initially scheduled to close today, August 14, 2024, has now been extended to August 23, 2024. The extension followed approval of the Securities & Exchange Commission (SEC).

Access Holdings extended the acceptance period for the rights issue, providing existing shareholders and other investors additional opportunity to participate in the new capital raising.

In a regulatory filing at the Nigerian Exchange (NGX), Access Holdings explained that the decision to extend was in response to the recent nationwide protest that disrupted operations of businesses and individuals across Nigeria.

Stakeholders insist that the funds raised is expected to fortify the bank’s capital base, supporting its continued expansion and its ability to seize emerging opportunities in the financial sector.

The proceeds of the proposed Rights Issue would be used to support ongoing working capital needs including organic growth funding for its banking and other non-banking subsidiaries.

The plans for the programme were disclosed in the Group’s Notice of the 2^nd Annual General Meeting holding on April 19, 2024, which was published on the Nigerian Exchange portal on March 27, 2024.

Breakdown of the Rights Issue

With the rights issue, Access Holdings will see an expansion in its issued share capital from N17,772,612,811.00 , divided into 35,545,225,622 ordinary shares, to N26,658,919,216.50.

This expansion is facilitated by the creation of an additional 17,772,612,811.00 ordinary shares, each priced at N0.50 Kobo, which will rank pari-passu with the existing shares of the company.Existing shareholders are to purchase one ordinary share for every two existing shares held.

The recapitalisation plan set by the CBN requires minimum capital of N500 billion, N200 billion, and N50 billion for commercial banks with international, national, and regional licenses respectively.

Likewise, the CBN also raised capitalisation baseline for Merchant Banks (N50 billion) and Non-interest Banks (National: N20 billion and Regional: N10 billion).

The options for the banks include  private placement, which allows lenders to seek new funds from pre-selected private investors and rights issue, which authorises them to invite existing shareholders to purchase additional shares in the bank at a discounted price relative to the current market price, among others.

Shareholders give nod to Rights Issue

Different groups of shareholders associations expressed their optimism on the ongoing rights issue by Access Holdings Plc.

They described Access Holdings as a forward-thinking financial institution with the right leadership and customer services to drive growth and profitability.

Shareholders said the ongoing capital raising exercise by the bank would lead to significant growth in operations and create higher value for all shareholders. The shareholders outlined Access Holdings’ track record of success as Nigeria’s most profitable lender, noting that the additional capital would scale up the output of the bank.

They described Access Holdings as a great financial institution that has consistently delivered good returns to shareholders.

They expressed their confidence that the bank will sustain its success trajectory success and payment of good returns to shareholders.

Founder and former National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Chief Sunny Nwosu, advised Access Holdings to continue to live up to shareholders and other stakeholders’ expectations through quality services delivery and good returns on investment.

According to him, the rights issue will be oversubscribed given the bank’s records of performance and delivery on set targets.

Nwosu said Access Holdings remains a solid institution, which has over the years surpassed shareholders expectations and has what it takes to keep the flag flying higher.

“I do not think that Access Holdings will disappoint investors. They have consistently delivered and exceeded investors’ expectations, and this current offer will not be an exception,” he said.

He projected that the Access Holdings shares would record significant appreciation whereby investors will have something significant to take home now, and in the many more years to come.

Nwosu said he expects investor confidence to be sustained, as  the institution’s track record guarantees acceptance and investments anytime it comes to raise new funds from the market.  

Also speaking, the National Coordinator, Pragmatic Shareholders Association (PSAN), Bisi Bakare, said Access Holdings had what it takes to attract the right investors, and it is already doing so with ease.

She highlighted the bank’s consistent dividend payments and robust financial performance, making it an attractive investment.

Bakare expressed her association’s support for the Rights issue, expressing the optimism that the offer will be over-subscribed at the end of the day. 

She said members of her association have been advised to take up their rights because the bank had all it takes to continue to declare profits and dividends.

She said: “I am going to take my rights, and we have advised other shareholders to do so. Investors should also see the opportunities the offer presents, based on the track record of success that is synonymous with Access Holdings. The Rights Issue is very good, and attractive to savvy investors”.

Taiwo Oderinde, also a member of the Proactive Shareholders Association, said Access Holdings has really added value to the economy and investors.

According to him, the company has surpassed projections in terms of how it has grown from its humble beginning to the status of a global brand.

He said the bank had been able to grow through mergers and acquisitions, and investors should take advantage of the rights issue.

According to him, anyone that invests in the offers will count huge gains in the years to come. “I predict great returns to investors in the rights issue,” he said.

National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, said the bank’s expansion into new markets will begin to pay off now, which presents good opportunities for investors of all classes.

He advised the bank to continue to equip its branches in the domestic market and offshore with the right technology to enable them continually to deliver quality services and bountiful returns to shareholders and all stakeholders.

He said investors are investing at the right time, because all the years of expansion and opening in new markets will begin to produce the right results.

He said the subsidiaries within the holding company structure should also be strengthened to ensure they continue to be profitable.

Okezie advised Access Holdings to show more interest in funding the real sector to support the economy and sustain growth of businesses.

“Overall, Access Holdings is a great brand, that has stayed the course of time. Its ability to deliver to customers and all stakeholders is not in doubt, and we believe that that track record of great achievements will be sustained,” he said.

He further advised the bank to continue to hire great talents and sustain a quality reward system to ensure that the entire workforce is motivated to surpass targets and deliver bountiful returns to shareholders.

Benefits of the Rights Issue

Chairman, Access Holdings Plc, Aigboje Aig-Imoukhuede, said the group decided on a rights issue as a commitment to the bond between the group and its shareholders.

According to him, shareholder value was at the core of the group’s business vision and the group decided shareholders, who had endured to build the group to its enviable status should reap the benefits.

At the “Facts Behind the Rights Issue” session at the NGX, Aig-Imoukhuede said the group is moving to a new phase of its phenomenal growth where shareholders would reap bountiful returns on their investments.

He urged shareholders to pick their rights as they stand to gain more from their investments.

According to him, the additional capital will enable the group to maximise emerging opportunities and deliver long-term value to shareholders.

He said the group was committed to strengthening ties with shareholders and enhance value creation.

Funding for infrastructure to rise

Access Holdings Plc reaffirmed its commitment to addressing infrastructure deficit and capital access challenges not only in Nigeria but across the continent.

Managing Director, Access Bank Plc, Roosevelt Ogbonna, said the bank’s focus on improving infrastructure at this time is informed by its desire to bridge the gap and connect Africa with the rest of the world.

 “As one of the continent’s largest and most diversified financial services groups, the Group is poised to   tackle Africa’s integration into global markets, which remains a significant challenge, hindering the continent’s economic growth and development, particularly in an era, where globalisation is rapidly reshaping economies worldwide.”

The Access Bank’s chief, who spoke in the light of the bank’s ongoing Rights Issue presentation at the Nigerian Exchange (NGX), said: “we are positioning ourselves to be one of the most respected banks globally,” adding, “our focus is on superior service across all the continents and countries we are operational in.”

Access Bank’s customer base, he stated, is expected to grow to 125 million by 2027, further cementing our market leadership.

This ambitious growth plan, in his words, “is part of the broader strategy to drive organic growth through strategic acquisitions, partnerships with international banks, and substantial investments in infrastructure and technology,”

Access Holdings’ ambitious five-year strategic plan, Ogbonna highlighted, aims to establish a presence in at least 26 countries by 2027, including the Organisation for Economic Co-operation and Development (OECD) countries, the United Kingdom, France and the USA.

To support this growth, he said, “Access Holdings plans to develop a cutting-edge digital platform and automated self-services to better serve its customers, as well as open cost-effective branches in strategic locations within and beyond Africa.”

According to him, building on this key aspect of Access Holdings’ growth strategy is the formation of strategic partnerships with major players in the financial sector. One of which is the Group’s partnership with Safaricom Plc and M-PESA Africa to expand cross-border money solutions in Africa.

As he put it, “this partnership will leverage Access Bank’s extensive network and presence across 15 African countries, including Nigeria, Kenya, Ghana and Tanzania, to provide affordable remittance solutions to key markets.”

He said Access Holdings is extending its cross-border money solutions in Africa through strategic alliances with Safaricom Plc and M-PESA Africa, leveraging its broad network of 15 African nations to provide competitive remittance options.

Besides, he said , the financial services group is collaborating with MasterCard to create a payment infrastructure that integrates a single cross-border money transfer system across multiple African markets.

This solution, Ogbonna emphasised, will enable businesses and consumers to make and receive international payments in over 150 countries, thereby enhancing the accessibility and efficiency of cross-border payments.

He stressed that Access Holdings’ strategic expansion plan could position Africa as a global economic leader, expanding financial and credit services to remote areas of the continent.

“The opportunities for African integration and economic progress are vast,” adding that by capitalising on its extensive network, large customer base, geographic reach, and market leadership, “Access Holdings is well-equipped to unlock new opportunities for African businesses and consumers, enhancing the continent’s interconnectedness.

Ogbonna said Access Bank has experienced significant growth, particularly following its merger with Diamond Bank, pointing out that this merger has positioned Access Bank as one of the largest retail banks in Africa by customer base and the largest by total assets.

He said Access Bank currently serves its markets through Retail, Business, Commercial and Corporate, saying over the past 18 years, the bank has demonstrated strong growth potential, solidifying its position as a leader in the African banking space.

The goal of becoming Africa’s gateway to the world, he said, is driven by the company’s plan to be the continent’s preferred trade financier and payment solutions provider.

According to him, this strategy leverages the enormous potential in trade and payment, including Africa’s $24 billion electronic payments market, growing at an annual rate of 30 per cent; the $950 billion in cross-border trade; and $100 billion in cross-border payments and remittances.

QUOTE

“Access Holdings’ ambitious five-year strategic plan, aims to establish a presence in at least 26 countries by 2027, including the Organisation for Economic Co-operation and Development (OECD) countries, the United Kingdom, France and the USA. To support this growth, Access Holdings plans to develop a cutting-edge digital platform and automated self-services to better serve its customers, as well as open cost-effective branches in strategic locations within and beyond Africa.”