October 25, 2021/CSL Research

In a statement released over the weekend, Nigeria’s oldest banking group, FBN Holdings Plc notified the public of the significant acquisition of 1.8bn of its shares by Olufemi Otedola (Chairman of Geregu Power Plc) and his nominee, Calvados Global Services Limited. This
amounts to an equity stake of 5.07% of the company’s issued share capital of 35.9bn, exceeding the 5.0% minimum threshold (formerly 10%) needed to have significant control in FBN Holdings. A This Day report, citing a letter written by Femi Otedola to FBN Holdings noted that he (Femi Otedola) also invested the sum of US$30m in the bank’s long-term debt instrument (classified as Tier II capital) and he is in the process of consolidating his shares held in the accounts of other indirect and nominee accounts which should potentially increase his stake.

Elsewhere, a document obtained showed that Mr. Tunde Hassan-Odukale (Chairman of First Bank Nigeria Limited) and related parties (Leadway Group) also acquired 1.9bn units of FBNH shares which amounts to an equity stake of 5.36% of the company’s issued share capital. There have been significant activities around FBNH’s shares since the start of the month resulting in a significant increase in the stock price by c.52.2% from an opening price of N8.05/s in October to close at N12.25/s on Friday, 22 October. Interestingly, there was an off-market cross of c.473m shares at N16 (60% above the day’s closing price) done earlier in the month, which left many investors wondering what could drive the willingness to pay such a premium. There have also been significant large volumes crossed in the market.

Beyond the buying activities, FBNH’s expected sale of the company’s equity investment in Airtel shares and its possible effect on retained earnings, capital adequacy and expectations around the bank’s plan to sell a stake in Firstmonie, have also been driving interest in FBNH.

In our conversation with the bank and based on communications from previous conference
calls, the group has been considering selling some of its stake in Firstmonie. Firstmonie is an official service from FirstBank through which customers in unbanked or underbanked regions can process financial requests through registered Agents and existing businesses. Considering the current valuations of Fintechs, any such transaction successfully conducted may lead to a re-rate of the stock.