The board of VFD Group has agreed to sell off 30% of its holdings in Abbey Mortgage Bank.
This resolution was made during the group’s Board of Directors meeting on May 30, 2024.
According to a corporate disclosure signed by the group’s company secretary, Gbeminiyi Shoda, the group was also looking to raise an additional N30 billion in capital, although subject to shareholders’ approval.
Details of the proposed sale
VFD Group currently holds 37.77% of the total share capital of Abbey Mortgage Bank, representing 3,835,181,810 ordinary shares.
The group is the majority shareholder in the financial institution, with Madonna Ashib Commercial Enterprises and Forte Properties & Investment being the other substantial shareholders, holding 16.54% and 13.61% of the bank respectively.
30% of VFD Group’s shareholding in Abbey represents 1,150,554,543 ordinary shares. By selling off these shares, VFD is looking to reduce its Abbey shares to 2,684,627,267, representing a 26% stake in the financial institution.
With Abbey Mortgage Bank’s share price at N2.70, VFD will possibly make N3.1 billion from the sale.
About VFD Group
VFD Group is an investment company with holdings in about 16 companies, both in Nigeria and in Ghana. Some of these companies include VFD Microfinance Bank (Vbank), Abbey Mortgage Bank, Anchoria Asset Management Limited, Kairos Capital Limited, and VFD Ghana Limited, among others.
In FY 2023, the group posted a gross earning of N45.1 billion, representing a 33% growth from the N34 billion posted in 2022. However, the group incurred an investment expense of N32.8 billion during the year, driven by fixed debts of N23.8 billion.
During the fiscal year, VFD Group posted an operating loss of N1.4 billion, representing a 117% decline from the N8.2 billion operating profit posted in FY 2022. It also posted a loss after tax of N750.4 million, from N6.8 billion profit after tax posted in 2022.
Though there was a 45% increase in the total assets of the group to N219.3 billion, from N151.5 billion. There was a slight decline in the net assets of the group, from N32.6 billion to N32.53 billion.
While the group has a controlling interest in some of its subsidiaries, it does not hold a controlling interest in Abbey Mortgage Bank. The company also has non-controlling interests in three companies, namely, O’Spaces Nigeria, HSE Gourmet, and E’Bar Metro.
Abbey Mortgage Bank is the largest associate of VFD Group, with total assets of N57.5 billion, representing a 44% growth from the N40 billion posted in FY 2022.
Abbey is also one of the profitable entities associated with VFD, as it posted a net income of N871.3 million, representing a 14% growth from the N766.1 million posted in 2022.
Also, VFD earned N153.4 million for FY 2023 as dividend income from its holdings in Abbey Mortgage Bank.
VFD Group capital raising efforts
- VFD’s attempt to sell off part of its stake in Abbey Mortgage Bank is linked to the group’s capital raising efforts. The group is also planning to raise N30 billion through a yet undisclosed means.
- During the board meeting, the board also approved a bonus share issuance of four new shares for every one held.
- This strategy is likely intended to attract investors to acquire newly issued shares, should the group opt for a rights issue to raise the N30 billion capital.