The recapitalization frenzy is in full swing, and the frontrunner banks – Access, GTB, and Fidelity – are already off the mark, with FCMB looking to join the race soon.
For me, this regulatory-driven recapitalization comes with mixed feelings.
I’ve been wanting to comment on the exercise but have stayed away, simply because I really do not have access to the kind of information that would make me make an informed decision.
But off the top of my head, I would expect that while the policy itself remains very critical for the continued stability of the sector, one cannot help but ask: from which market are these banks hoping to raise these humongous sums?
Savings are dipping, the cost of living skyrocketing, businesses outside their sector are recording massive losses, local and international debt escalating, countrywide ratings deteriorating, and FDIs tepid with FPIs unsure of what they really want – coming and going in hesitant steps.
But the banks have never been known to be cowardly. If for anything, the way they approach their business with military precision is simply the main reason they have seemed to have built a bulwark against the ravaging effects of an unfettered economy.
Already, these three banks have jumped into the fray, announcing very ambitious public offers with Access Bank showing the boldness that has made it the darling of the markets.
They didn’t go for a public offer but instead chose Rights. A Right is when you ask existing shareholders to buy more.
This shows the level of confidence in their value proposition and their very strong belief in the benefits they have devolved to their shareholders over the years and its resultant effects on their buying decisions.
The smooth transition after Herbert’s sad passing and the infusion of highly respectable leadership, along with the immediate announcement of a historic performance, have all geared to make Access’s Rights issue a darling to its shareholders.
Fidelity Bank, so far, has been a brilliant prospect. Relatively smaller in both size and offer proposition, its value offer is huge as it affords a great growth margin for investors.
With a relatively young management team, strong strategic intent, and a vision that cuts across markets, I’m not hesitating to endorse their offer.
For GTB, I’ll just calm down a bit. Their pricing is throwing up discussions amongst market watchers, making one wonder if it was clearly thought out.
Another thing is the seeming key man risk that tends to not give it the cascading spread in collective decision-making. This may be a slight concern for me, but overall, it’s still a strong buy option, especially with its historic record of value creation for its shareholders and a strong appetite for future performances.
But in all of these is the Temi Popoola-led NGX incursion into the primary market with its novel NGX Invest platform.
Historically, the NGX, apart from its Facts Behind the Figures program and limited research support for public offers, usually just stands aside and watches as other market players struggle and later just reaps the benefits through listing and subsequent secondary market trades.
But this time, they have jumped into the fray by launching this platform designed to further ease the participation of the public in this very important exercise.
I was recently called into a very select session with media personalities to review the platform.
At the session, the very eloquent Temi Popoola, who has been driving innovation at the NGX, carefully took us through the particulars of the platform.
NGX Invest is the latest in a series of technology-driven initiatives we are witnessing from this reformist leadership at the NGX.
According to him, the platform has a sleek, user-friendly interface that simplifies market offerings even as it modernizes equity issuance and democratizes opportunities to a wider range of investors.
What this means in layman’s language is that at the tip of a finger, one can get access to these offers, get accurate and unbiased research information on the offers, putting you in a strong position to make better decisions while also finally offering you an efficient and seamless buy process.
The platform is so wonderfully configured that it’s no wonder issuers have already linked up with its API in their recapitalization efforts, efficiently connecting with retail investors.
This is a far cry from what we were used to when physical forms would be filled, collated manually, and submitted to registrars who would also manually process, often with a lot of headaches and confusion.
The NGX and its board, led by my big brother and friend Alh Kwairanga, have shown very clearly their willingness to be fluid and technology-savvy. This, in my mind’s eye, has brought back confidence in their bourse, and this is why you see these banks coming to them to issue and reissue shares, among others.
The SEC has also done well in approving this, and I hope this will mark the beginning of a turnaround in their approach to their duties.
Finally, let me say that I am really very confident that this exercise will be successful. The confidence does not come from any macro market drive because, as already mentioned, I do not see where or how the already harried retail market will find these kinds of funds at these times of economic strangulation. But my optimism is hinged on the banks’ historical performance matrix that has always seen them cross the tapes brilliantly well.
How they plan to do that is none of my concern as long as they succeed and achieve the CBN’s goal of strengthening the space and giving us very vibrant and sturdy institutions.
As for the NGX, we will say well done on this initiative, as this is the NGX of our dreams, an institution that understands market trends and keys in very perfectly.
Strong buy recommendations for Access and Fidelity. For GTB, use your own judgment, and when FCMB comes out, we will evaluate it.
Do something and don’t just sit on the fence. Join the party.
Thanks.