July 12, 2024

By Kelechukwu Mgboji InvestAdvocate

Lagos (INVESTADVOCATE)-Barely one month before August 8 closing date of Access Bank’s 17.77billion rights issue, some shareholders and investors are pondering whether the offer is a good buy or not. Here are some facts to help investors make investment decision to exercise their right or leave out.

The rights issue in which the lender hopes to raise N351billion is being offered at the price of N19.75 per unit, much lower than the year’s high of N30.70 price of the stock as of January 18, this year.

In other words, the potential for the stock price to move up (capital appreciation) is huge, and some market analysts see the stock close above N35 – N40 range by end of 2025. But does this make the stock a good buy? Here are a body of data offering more insight on the Holding company.

Founded as a modest enterprise, Access Bank transformed from a fledgling bank in 2002 to a behemoth under the visionary leadership of the founders. Aig Imhokhude and late Herbert Wigwe. Wigwe is fittingly described as the “Titan of Africa Finance” having systematically executed series of five-year growth plans that saw the banking group to an unprecedented height as one of the top five in Africa and the largest retail bank network with over 60 million customers.

The current Group Managing Director and Chief Executive Officer, Mr. Roosevelt Ogbonna, who has succeeded Wigwe’s profound legacy of visionary leadership, promises investors a windfall of returns on their investments.

He told capital market community at the Nigerian Exchange trading floor in Lagos that over the past two decades, the banking group had invested on series of strategic mergers and acquisitions for expansive growth. And having achieved its growth ambition as a global banking group, the time has come to consolidate on its growth with attendant reward for shareholders who have stood beside and behind the bank over two decades of investment years.

To this end, the leadership of Access Holdings plans to throw on shareholders dividends payout never seen in the banking sector by 2027. What does this entail? Hear from the horse’s mouth.
“We are near finishing the phase of investment and growth. We are entering, from Q1, Q2 2025, a consolidation phase. We are now consolidating for the future and to the benefit of all stakeholders,” the Access Group boss disclosed.

He continues: “For shareholders it means since we don’t have many MPV projects left, there will be more dividends pay out for our shareholders. We have taken our time to bake the pie, where we are now is to eat the pie.

“By 2027, we will have customer base of 125 million. Our projection is that 50 million of our active customers will transact with us daily,” Mr. Ogbonna stated during the lender’s facts behind the figures presentation at the Nigerian Exchange last Tuesday.

According to him, Access Holdings UK subsidiary is projected to be one of top 20 banks in the UK by 2027 and will be generating annual profit of about $1billion. When converted to local currency (Naira), this translates to over N10trilion going to be distributed as annual dividends to shareholders beginning from 2027.

“The consolidation phase will begin to pay huge dividends. When we have that quantum of money, of course, we cannot eat the money alone. We will share it with our shareholders; they will get the value for their investments,” Ogbonna assured.
He described the UK subsidiary as the Bank’s natural hedge against naira devaluation since the earnings are in Dollars, pointing out that the dollar earnings guarantee a buffer against shocks in the local economy.

But Access Holdings UK subsidiary is not all the consolidation story as Ogbonna disclosed that the US subsidiary is springing up very soon to boost the Bank’s foreign currency earnings. This is in addition to the earnings by other Africa subsidiaries located in about 15 countries in Africa.

The Group Chairman and founder of Access Holdings Plc, Mr. Aigboje Aig-Imoukhuede, said the reason management and board of the Holding company decided to do rights issue alone was to ensure that the shareholders who have stood behind them through thick and thin get deserving reward for their loyalty and support, stressing that no shareholders would be left behind.

He presented the scenario more succinctly when he alluded to forecasts made by investments analysts relating to per share earnings and returns for the stock.

“There are certain things I look at when I want to invest in a business or I’m interested in a business to invest in.
“If you look at the earnings profile of Access Bank, project it in Naira. The earnings forecast is anout N17 per share annually. How much are shareholders paying for it? N19.75.

“Now, the bank does not need further reinvestment to make that money. So it is not seeking additional capital that will dilute those earnings. So, the reality is that it will be so sad if after you shareholders have gotten us thus far, stayed with us through thick and thin, through blood, sweat and tears, through the time of investing; and now this money-making machine is about to start dropping money and then we fail to appreciate. No, we can’t make that mistake. This is why we decided on rights issue to give our supportive shareholders returns for their investments,” the Group Chairman concluded.