We have seen a very troubling report. The Giant GTCO was said to report a sad 48% under subscription in their recent capital raise exercise that was thrown up in strict compliance to the Central Banks policy on DMBs recapitalisation.
Apparently, they had set out to raise about N400. 5b but ended up with a paltry N209. 41 billion signposting a new reality for an institution that led the market on all fronts until this slap.
The amazing thing about this result is the fact that they reported a whooping N1 trillion PBT half year 04 and pushed impressively to 1.4trillion in their 9month results.
This should ordinarily excite the markets and push them towards making the capital raise exercise a fun one.
However, the markets thought otherwise and decided to raise its nose against such an exciting offer.
The prizing was right, the institution is one of the most profitable in the land so what happened, why did the giant Conglomerate ‘Lu le’ like our famous President once described his predecessors colourful run at the Presidency.
But before we dimension that, lets look at other Banks who went to the market at the same time and see how they fared
Fidelity Bank is the new belle of the market. Their offer was oversubscribed. We do not have the percentage over subscription but discussions from very strategic sources within the Bank have revealed to me that they got almost x3 of what they went out for.
This remarkable performance has seen a previous major shareholder diluted with fresh shareholders coming in to bolster and strengthen the Bank
This performance shows a remarkable confidence in the management of the Bank which in my estimation remains one of the most vibrant in the market place today.
Further probing shows that the bulk of the funds came from the South Eastern part of the country with many first time investors throwing in whopping sums in a bid to hold down the ‘only Bank we have’.
Fidelity Bank pulled in a brilliant N127. 1billion.
FCMB is a love story. Their target sum was N147. 5b and they were over subscribed by 33%.
Let me try and explain their success.
They took very serious advantage of the Temi Popoola led NGX retail online platform to access the rich retail market.
Apparently, Temi’s reformist team at the NGX had built a novel application that allowed for anybody raising funds to access the market very efficiently and sweetly.
I was invited to its unvailing and Temi the extremely brilliant head honcho at the exchange spoke very glowingly about the platform and its potentials
Apparently, FCMB listened while GTCO was busy doing food and fashion shows all over..
I have heard that FCMB leaning very heavily on thier very aggressive retail loan subsidiary levearegaed the NGX platform to farm the new retail customers who were trading with them at the loan side of their business
This and other explosive initiatives made their run a breeze.
Kudos must be given to the Board and management of FCMB for moving the bank away from a family owned entity to a bonafide institution with thousands of shareholders and with one of the strongest corporate governance ethos in the market.
Access Bank was very strategic in their run.
They came to the market with a unique challenge. They had lost their charismatic leader and had very successfully achieved a seamless transition that positioned them for the race.
They didn’t do a public offer in the real sense of the word but ensured strategic placements that reflects the new leadership structure of the Bank
It is no wonder that the pricing was at a premium far above the market pricing to ensure a tight and cohesive almost controlled push to the market place.
They reached the target without breaking a sweat thereby well positioning the leadership of the Bank in this new era of banking
The target figure was N371. 8b and they achieved an oversubscription of 106%. They were even the first to be cleared by the CBN
The case of FBN Holdings is my favourite.
They got a board approval to raise N500b thru a combination of public offer, Rights and Private Placements.
They sailed very smoothly past the first tranche of N150b and have announed a private placement for the balance
Their activist Chairman is well positioned to ensure this target is met easily.
In looking at FBNs case you must understand that this excercise is very critical to the persistent ownership struggle in the Bank.
The team who scavenged and ravaged the place are permanently on the look out to see how they can take advantage of any loophole to come back.
The present leadership have instituted far reaching reforms which have started showing, with the historic results recently posted and a surgical recovery programme that is reverberating makes the FBN Holdings space an exciting space to watch.
Tony Elumelu’s UBA just closed theirs this December and feelers I am getting shows a positive run that should break all over subscribed records that have been announced hitherto
Zenith have not officially anmounced their results but feelers im getting shows a massive and impressive outing with their new MD Adaora leading the charge.
I also have heard that they too are seriously over subscribed
So back to GTCO. What went wrong. Insiders I have spoken to for this article have thrown up a lot of reasons
The controversy that it ran into with the ‘attack’ by the renegades who accused its GMD of all sort, the keyman risk that comes without a visible showing of a credible succession structure, the crash of its online banking platforms at the time, thereby stunting its push towards the retail market, its strategy of pushing towards foreign investors and Institutional investors were some of the reasons adduced for this poor showing
Whatever the case is, a 48% undersubscribed outing for such a power house cant be something that should be taken with levity.
In more serious climes, heads would have been rolling and some suits would have been given the treatment the wicked teacher in Ikorodu gave the 3 year old pupil and which landed her in prison but in this case, the suits would be well deserving of such slaps.
Whatever the case is, GTCO will need to clear it’s eyes and see this clear warning signals that the market has thrown at it.
It cannot be business as usual and they must come to the reality that despite their huge profits market confidence is at its lowest ebb.
This is a warning shot and if they are the brilliant people that we think they are, they should start looking very critically at themselves, market perception and the rest to redress this thing.
Firstly a clear leadership structure pushing out the key man risk be fashioned and implemented immediately.
Competition has done this very beautifully. Roosevelt has matured into the role at Access, Adaora is holding her own at Zenith, Oliver is pulling his weight at UBA even Fiest Bank is shining with their MD but at GTCO, the question is still – who or where is Mariam
This may have spooked institutional investors who stayed off the offer in their throngs.
GTCO is now a full National brand and we cannot be happy at this turn of events hence this write which should serve as a wake-up call to its leadership and Shareholders to either smell the coffee or watch this very beautiful brand slowly slide into the minor leagues.
You may now come and beat me.
Thanks
Duke of Shomolu
