Longstanding Nigerian lender, Union Bank officially opened a N50 billion rights issue to the public on Wednesday, which it hopes to deploy into raising its capitalization and growing agribusiness loans.
The bank will be selling 12.1 billion ordinary shares at N4.01 per share at the rate of 5 new shares for every 7 held. The Issuing Houses involved in the transaction are Chapel Hill Advisory Partners Limited which is serving as the Lead Issuing House to the Bank; and FSDH Merchant Bank Limited and Stanbic IBTC Capital Limited as Joint Issuing Houses. The rights issue closes on October 20, 2017. The bank, had last month gotten approval from the Securities and Exchange Commission (SEC) to commence with the offer.
80 percent of the funds raised will be applied towards meeting capitalization requirements. MD of the bank, Emeka Emuwa had few months ago hinted that the bank intended raising its capital adequacy ratio from 15 percent to 205 percent. The rest of the funds will go towards lending in the agribusiness space.
Union Bank Plc, one of Nigeria’s oldest banks, was established in 1917. It was considered one of the top banks in the country till it began struggling with liquidity issues in the early 2000s.
The Asset Management Company of Nigeria (AMCON) eventually injected N239 billion as capital into the bank in 2011.
Investors eventually returned to acquire stakes in the Bank with Union Global Partners Limited (UGPL) buying a 65 percent stake in the bank in 2012, and Atlas Mara a 20 percent stake in 2012, from AMCON respectively.