The Nigerian Exchange Limited (NGX) experienced remarkable growth in 2024, as a wave of equity listings and capital-raising initiatives propelled market metrics.
The total market capitalization surged by 53.37% year-to-date, climbing from N40.918 trillion to N62.76 trillion, while the All-Share Index (ASI) advanced by 37.65%, closing the year at 102,926.40 basis points.
This significant expansion was underpinned by the listing of 269.942 billion shares, valued at N5.839 trillion, across multiple sectors.
The year’s equity activities reflected a strategic mix of public offerings, rights issues, and private placements as companies raised capital to comply with regulatory mandates, address foreign exchange challenges, and fund strategic growth initiatives.
Quarter-by-Quarter breakdown
In Q1, the CBN announced revised minimum capital requirements for commercial and other banks, setting new thresholds to ensure financial stability and resilience. For instance, commercial banks with international authorization are now required to maintain a minimum capital of N500 billion by March 2026.
The wave of compliance-driven equity raises began with Jaiz Bank. In February 2024, the non-interest bank launched a private placement of 10.05 billion shares at N1.00 per share, successfully raising N10.05 billion.
This initiative set the tone for subsequent capital-raising activities within the sector.
The second quarter of 2024 witnessed significant fundraising activity in the financial sector, with major players collectively raising over N878.61 billion and adding approximately 44.77 billion shares to the market.
This marked a substantial contribution to the Nigerian Exchange’s overall market capitalization growth.
Here’s a breakdown of the key listings and equity raises:
Fidelity Bank: On June 5, Fidelity Bank announced a capital raise of N127.10 billion through a combination of public offerings and rights issues. This effort boosted the bank’s outstanding shares to 45.2 billion.
Access Holdings: On June 8, Access Holdings unveiled plans to raise N351.01 billion by issuing 17.77 billion shares. This move increased the company’s outstanding shares to 53.32 billion, resulting in a 33.3% dilution.
GTCO: On June 24, GTCO disclosed its intention to raise N400.5 billion by issuing 9 billion additional shares. This would increase the bank’s total outstanding shares to 38.43 billion, reflecting a 23.42% dilution.
Following this, on January 7, 2025, GTCO announced the successful completion of its first phase, raising N209.41 billion following the CBN’s verification of the raised capital.
The third quarter saw a mix of bank capital raising and corporate listings that substantially boosted NGX’s market capitalization.
FCMB Group: On July 29, FCMB launched a public offer to raise N110.9 billion by selling 15.2 billion shares at N7.30 per share.
Zenith Bank: On August 1, Zenith Bank unveiled a N290 billion capital raise through a public offer and rights issue, involving the issuance of 8 billion shares priced between N36.00 and N36.50.
International Breweries: On August 21, the brewery giant listed an additional 141.43 billion shares following an 87.75% subscribed rights issue, valued at N516.22 billion.
Nigerian Breweries: In September, Nigerian Breweries raised N548 billion by offering 22.6 billion shares at N26.50 per share, addressing its foreign exchange exposure and strengthening its working capital.
The last quarter saw a wave of high-profile listings, significantly boosting NGX’s market cap.
Aradel Holdings: On October 14, Aradel listed by introduction 4.35 billion shares, valued at N3.05 trillion, marking one of the year’s largest listings.
UBA: On November 4, UBA announced a rights issue to raise N239 billion by offering 6.84 billion shares at N35 each, increasing its outstanding shares to 41.04 billion.
FBNH: Also on November 4, FBNH launched a rights issue to raise N149.56 billion by selling 5.98 billion shares, expanding its outstanding shares to 41.88 billion.
Haldane McCall: On November 24, the company listed by introduction 3.12 billion shares at N3.84 per share, achieving a market cap of N11.98 billion.
Market implications:
The wave of capital-raising initiatives by Nigerian banks and other companies in 2024 has significant implications for both shareholders and the broader capital market.
While the immediate effects may include shareholder dilution, the long-term benefits could prove transformative for the companies and the Nigerian Exchange.
Immediate impact: Shareholder dilution
Raising capital through equity issuance increases the number of shares outstanding, potentially diluting existing shareholders’ ownership stakes.
This dilution often leads to a reduction in earnings per share (EPS), which may initially dampen investor sentiment.
Long-term benefits
However, the strategic deployment of the raised funds holds immense potential.
Companies can leverage capital to achieve sustained profitability, expand their market share, enhance financial stability, and meet regulatory requirements.
These funds also fuel accelerated growth initiatives and strengthen investor confidence, especially in industries facing stringent capital mandates.
Boost to the Nigerian capital market
For the Nigerian capital market, these listings inject much-needed liquidity and invigorate investor activity.
- Projections indicate that the collective N1.68 trillion anticipated from bank capital raises alone will play a pivotal role in enhancing market dynamics.
- Moreover, the expanded market capitalization strengthens the Nigerian Exchange’s appeal, positioning it as a more attractive destination for both local and foreign investors.
- The rising influx of fresh capital not only bolsters the Exchange’s competitiveness but also signals a robust and resilient market environment.
As these initiatives unfold, they promise to reshape the financial landscape, balancing short-term adjustments with far-reaching economic growth and market development.
