Sterling cuts bloated share count by 90%, resets price to N77

Sterling Financial Holdings Company Plc has completed its 1-for-10 share reconstruction, pushing its quoted share price to N77 from N7.70 as the company cuts the number of shares outstanding by 90%.

The Nigerian Exchange delisted Sterling’s 68.50 billion existing shares on October 8 and simultaneously listed 6.85 billion reconstructed shares, with every 10 existing shares converted into one new share.

The tenfold jump in the share price does not represent a corresponding increase in Sterling’s market value.

Its market capitalisation remained unchanged at N527.5 billion, as the reduction in shares was matched by a proportionate increase in the reference price.

For example, an investor who held 1,000 Sterling shares at N7.70, worth N7,700, now holds 100 shares at N77, also worth N7,700 before subsequent market movements.

What they are saying

Sterling Financial Holdings said the reconstruction is intended to streamline a share base that has expanded significantly following successive capital raises.

• By reducing its outstanding shares from 68.5 billion to 6.85 billion, the HoldCo expects to improve price formation, make per-share performance more comparable across periods and peers, and strengthen the stock’s positioning with institutional and retail investors.
• The Holding company also linked the exercise to its growth strategy, saying the reconstructed share base should support a market valuation that better reflects its earnings capacity, capital strength and growth prospects.
• It nevertheless acknowledged that the proportional price adjustment does not itself increase the economic value of the business.

Cowry Asset Management broadly agreed with that distinction. The brokerage firm described the reconstruction as fundamentally neutral to shareholder value but strategically positive for Sterling’s capital-market positioning.

• It cautioned investors not to interpret the jump from N7.70 to N77 as a re-rating, noting that the share count fell by 90% while the reference price increased tenfold, leaving market capitalisation and shareholders’ proportional ownership unchanged.
• Cowry also warned that the new N77 reference price should not be treated as a target price or evidence that Sterling has suddenly become more valuable. Instead, it said a stronger investment case would still depend on sustainable earnings growth, returns on equity, investor demand and how Sterling’s valuation compares with peers.

The case for a more efficient share structure

Sterling’s case for the reconstruction becomes clearer when you look at how quickly its share count expanded in recent years.

• The HoldCo entered 2024 with about 28.79 billion shares outstanding. Successive capital raises then pushed that number to 45.46 billion in 2024, 54.69 billion in 2025, and 68.50 billion by H1 2026.

Much of that expansion came from the HoldCo’s recapitalization programme. Sterling raised capital through three main rounds: a N75 billion private placement, a N28.79 billion rights issue, and an N88 billion public offer.

• The rights issue also attracted excess subscriptions, part of which was restructured as a private placement, while the CBN eventually recognized N96.69 billion from the public offer as additional capital.
• Sterling said about N153 billion was ultimately injected into Sterling Bank and The Alternative Bank to meet the new capital requirements.

That rapid expansion left Sterling with one of the largest share bases among Tier 2 and mid-tier banking peers.

• By H1 2026, its 68.50 billion shares were slightly above FCMB’s 65.95 billion and Fidelity’s 63.17 billion, while Wema had about 40.12 billion and Stanbic IBTC 15.90 billion.
• This comparison shows that Sterling was not alone in expanding its share base during the recapitalisation cycle, but it had moved to the top end of the peer group

That matters because the increase in shares diluted the growth investors saw on a per-share basis.

• Sterling’s profit after tax rose strongly over the period, but the benefit to each share was increasingly diluted as the company issued more shares.
• In 2024, PAT more than doubled to about N43.68 billion, while the share count rose 57.9% to 45.46 billion.

Earnings growth was strong enough to stay ahead of the increase in shares, so EPS also more than doubled from 75 kobo to N1.51.

The picture changed in 2025. PAT jumped another 74.8% to N76.33 billion, but the share count increased by 20.3% to 54.69 billion. As a result, EPS barely moved, rising from N1.51 to N1.52.

By H1 2026, the dilution became even clearer. PAT rose 20.4% year-on-year to N50.30 billion, but EPS fell from 89 kobo to 77 kobo after the share base expanded further to 68.50 billion.

Overall, Sterling was making more profit, but that profit was being spread across more shares.

The 1-for-10 reconstruction therefore came after Sterling’s share count had more than doubled from its 2023 level.

By reducing the 68.5 billion shares to about 6.85 billion, the company did not create additional value, but it substantially changed the scale at which earnings, book value and other per-share measures would now be presented.

What you should know

The advantage of Sterling’s reconstruction is more structural than economic. The reconstruction does not create new profit or shareholder value.

• However, by reducing the share count from 68.5 billion to 6.85 billion, each share now represents a larger interest in the company, resulting in higher per-share figures for earnings, book value and dividends and making Sterling’s per-share performance more comparable with peers.

There are Nigerian precedents. Wema Bank carried out a 1-for-3 share reconstruction in 2022, reducing its shares from about 38.57 billion to 12.86 billion.

• Its adjusted share price moved from about N2.76 to around N3.10 shortly afterwards, representing a gain of roughly 12% above the reconstructed reference price.

Transcorp Plc also implemented a 1-for-4 reconstruction in 2024, reducing its shares from about 40.6 billion to 10.2 billion. Its market value subsequently rose by roughly 10% in the period following the exercise.

Aradel Holdings provides a useful contrast. Its 2024 transaction was a stock split rather than a reconstruction, increasing its shares from about 217 million to 4.34 billion while the price adjusted from N9,399 to N469.95. The stock subsequently rose by about 36% to N641.06 within days.

For new investors, Sterling now carries a much higher nominal entry price of N77 per share compared with N7.70 before the reconstruction.

However, one new share represents the equivalent of 10 old shares, so the higher price does not mean investors are paying more for the same ownership interest.

The lesson for Sterling investors and potential investors is that a change in share structure can influence how a stock trades.

• Transcorp gained about 10% after its reconstruction, while Wema gained 43.6% in 2023 and more than doubled in early 2024 following its 2022 reconstruction.
• Aradel rose 36% after its stock split but later retreated following its NGX listing.

These experiences show that gains can extend beyond the price adjustment but can also reverse. Sterling’s performance from the adjusted N77 price will depend on earnings growth, dividends, valuation, and investor demand.