Ecobank Group seeks privileged investors for $250m capital raise

Ecobank Group is on the lookout for a limited number of investors to take up the offer from its new $250 million capital raise, the transnational banking group announced Thursday, following approval at an emergency general meeting.

Subscription to the offer is up for grabs on the basis of “first-order priority to a maximum of one hundred (100) shareholders on a first-come, first-served basis,” the corporation said in a note to the Nigerian Exchange Limited.

The restricted group will only be extended to accommodate more investors based on second-order priority, it further stated.

Shareholders first agreed to the move to source the capital last month before the group assembled shareholders holding at least 10 per cent of its voting shares to decide the shape it will take.

The banking industry regulator in Nigeria, where Ecobank Group runs the largest of its 365 Africa subsidiaries, is asking lenders with international operations to increase regulatory capital tenfold to N500 billion by next March.

Lenders holding national operating licences are to increase theirs to N200 billion from a threshold of N25 billion, while lenders with regional permits will bump up core capital to N50 billion from N10 billion.

Scaling up core capital has become urgent after the naira took a battering from two major devaluations within seven months, leaving the capital base of banks much weaker in purchasing power terms.

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Beyond boosting the resilience of banks, the Central Bank of Nigeria is betting that recapitalisation will help lenders set Nigeria on the path to a trillion-dollar economy by 2030.

Ecobank Group said it will set the conversion price of the capital-qualifying instrument it wishes to issue at a level higher than “the 5-day VWAP (Volume Weighted Average Price) on the Nigerian Exchange (“NGX”), on the conversion date, converted into US$ at the Prevailing Exchange Rate and the Floor Price on the Conversion Date of US$0.01 per Ordinary Share.”

It rolled an extra $125 million into its $400 million Eurobond expiring in October 2029 at a 10.1 per cent coupon rate last month to raise cash to refinance a soon-to-mature debt and for other corporate purposes.

Subscription rate more than doubled the size of the offer, the financial institution said, adding that the debt issue attracted demand from development finance institutions, asset managers and lenders. Investors were drawn from across Africa, the US, the UK, Asia, Europe and the Middle East, it said.