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By Olufemi Jacob

The over 920,000 shareholders of Access Holdings Plc are excited that the banking group’s rights issue will soon open today, providing another opportunity to expand their stakes in Nigeria’s biggest financial company by assets.

Barring any unforeseen development, Access Holdings rights issue to raise N351.09 billion will open on July 8, 2024 and close on Thursday, August 8, 2024. It is one of the largest capital raising programmes in the nation’s capital market in recent years, instigated largely by the Central Bank’s upward review of the minimum share capital for banks.

International banks, of which Access is one of the few, are expected to grow their capital base to a minimum of N500 billion, according to a CBN policy announced last March by Governor Yemi Cardoso. With the additional N351 billion, Access will easily surpass the target, becoming one of Nigeria’s biggest financial services company by shareholders’ funds. It already occupies the top spot by assets and number of customers.

Recently, Access Holdings held a formal signing ceremony with key participants in the offer as part of the arrangements to raise the funds. The money would be deployed to enhance its working capital requirements, and this includes organic growth funding for its banking and non-banking subsidiaries. Simply put, Access Holdings will use part of the N351 billion to acquire other banks and non-bank businesses across the world. Opting for solely a rights issue instead of combining it with a public offer as done by other banks is a deliberate attempt to protect the retail shareholders from dilution. ‘’In 2002 when we took over Access Bank, we had promised the existing shareholders that they would always be carried along as we grow. This rights issue is one example of our commitment to that pledge,” says Access Holdings Chairman Aigboje Aig-Imoukhuede.

It is a vow that resonates with the shareholders. Says Chief Sunny Nwosu, a well-known investor in the banking industry and an important player in the capital market, ‘’Access Holdings’ stocks are easily some of the best investment options in the country. I am sure that this offer will be oversubscribed, especially with the array of well-heeled foreign investors in its books’’.

Another shareholder, Mrs Bisi Bakare puts it more succinctly, ‘’the quality of management of Access Holdings; its resilience; time-tested traditions of integrity and transparency endear the bank to the investing public. Consistently, we have seen our investments grow and we are happy.”

The signing ceremony with respect to the Offer was held at Access Tower, the corporate office of Access Holdings in Lagos. Access Holdings’ shareholders had at its 2nd Annual General Meeting (AGM) on Friday, April 19, unanimously backed its plan to execute a Capital Raising Programme of about US$1.5 billion as well as the subset initiative to raise capital through a Rights Issue of ordinary shares to its shareholders.

Under the Rights Issue, the bank will offer 17.7 billion ordinary shares of N0.50 each at N19.75 per share on the basis of one new ordinary share for every two existing ordinary shares held as of Friday, June 7, 2024. “The Rights Issue is a significant step in delivering our 2023-2027 strategic plan. The additional capital will enable us to maximise emerging opportunities and deliver long-term value to our shareholders’’, enthused Bolaji Agbede, acting Managing Director/Chief Executive Officer of Access Holdings at the signing event.

The offer is opening at a moment of great buoyancy for the bank, coming after winning a series of awards in the last few months. Just last week, Access Holdings was named the leading Tier-1Bank in the 2024 Proshare Bank Strength Index (PBSI) report. The PBSI evaluates banks based on a comprehensive set of financial metrics derived from audited financial statements for the Financial Year 202. This award therefore, underscores Access Holdings’ significant strides in the banking sector. Proshare’s latest report places Access Holdings at the forefront, alongside other prominent institutions like Zenith Bank, FBNH, Ecobank, UBA and GTCO.

As the Nigerian banking sector evolves, Access Holdings stands out for its proactive approach to addressing macro and microeconomic risks. The report draws parallels to the challenges faced by United States banks where some banks like Silicon Valley, First Republic and Signature Banks, failed in 2023 due to poor asset and liability management (ALM). With the CBN’s recapitalisation programme, the report highlights the importance of investment in financial technology, customer service scalability and digital asset engineering between 2024 and 2026. The analysts emphasise that, “With higher capital levels, banks must use the larger amounts of cash available to improve shareholder returns and customer service experiences. Many banks will get cut at the knees by lacking a deliberate strategy to transition from cash flow to value creation.”

The report further highlighted Nigeria’s economic trajectory, noting, “Nigeria’s GDP in 2005 was N38.78trillion and rose to N77.94trillion, roughly two times in 2023, suggesting an average annual growth rate of 3.55 per cent in the last two decades. However, between 2000 and 2005, bank equity sizes grew over ten times or by 1,150 per cent from N2billion to N25billion. In other words, for a decade and a half, banks have used ten times more equity in their businesses than before 2005, yet the country’s GDP growth has been modest.”

The report, however, clarifies that simply raising Nigerian banks’ equity base is not a guarantee for economic growth and development. “Transforming bank equity into drivers of economic growth requires more than money; it requires a coordinated public and private sector plan, with what Proshare analysts have repeatedly called a whole-of-government approach to policies, programmes, and processes.” Reviewing bank performances in 2023, Proshare analysts observed that banks were pursuing increasingly aggressive approaches to acquiring digital market share while supporting lower operating costs (lower cost-to-income ratios (CIRs).

In May, Aig-Imoukhuede was honoured with the prestigious African Banker Lifetime Achievement Award at a gala in Nairobi during the Annual General Meeting of the African Development Bank. About the same time, the banking conglomerate also won the top spot in the Brand Finance’s Top 500 Banking Brands for the third consecutive year.