Three new ordinary shares would be issued for every eight ordinary shares held as at May 20.

Sterling Bank Plc says it intends to raise N12.48 billion through the issuance of rights issue from its existing shareholders between June 24 and July 31.

Yemi Adeola, the bank’s Managing Director, announced the plan at a completion board meeting held on Monday in Lagos. He said that rights issue of 5.89 ordinary shares of 50k each would be sold at N2.12 per share for expansion of business operations.

The current price of the bank’s stock is N2.66k as at June 17.

The bank boss said that the rights would be issued on the basis of three new ordinary shares for every eight ordinary shares held by shareholders as at May 20. He said that out of the proceeds, N4.24 billion would be used for branch expansion, N1.82 billion for infrastructure upgrade, while N1.21 billion would go for information technology.

According to him, N12.13 billion will be used to increase the bank’s working capital.

The banker said that the rights issue was the beginning of the bank’s capital raising journey agreed upon by the shareholders in 2012. He said the management had laid solid foundation for the bank’s franchise in the last seven years as its shareholders’ funds had reached over N40 billion.

Mr. Adeola said that the bank would open additional 48 branches across the country to strengthen its retail banking franchise.

“Size is becoming key and relevant in the industry and we will establish more branches to strengthen our retail banking and enhance our corporate banking services,” he said.

The bank boss said that shareholders needed to be excited with the rights issue following its discount price and assurance of consistent dividend payment in the years ahead. He, however, urged the shareholders to pick their rights because they would not regret investing in the bank.

The managing director said that the bank would raise a tier two capital before the end of the year to consolidate on its operations.

On the establishment of offshore branches, he said that the nation’s market was huge and needed to be captured first before embarking on offshore expansion.

Suleiman Adegunwa, the bank’s Chairman, said that part of the proceeds would also be used to fund the growth of the bank’s loan book.

The issuing house to the issue is Sterling Capital Markets Ltd, while CardinalStone Securities Ltd will act as stockbrokers.

(NAN)