BY NIYI JACOBS
Access Holdings Plc’s rights issue has sparked mixed reactions from the market, with some expressing cautious optimism while others raise concerns. The issue price of N19.75 per share represents a 15% premium over the qualifying date price, which may disincentivize some shareholders from participating. However, the bank’s chairman, Aigboje Aig-Imoukhuede, justified the premium, citing the bank’s robust earnings profile and strong financial performance.
The primary objectives of the rights issue are to bolster Access Holdings’ Common Equity Tier 1 (CET1) capital and enhance its capital adequacy ratio. The proceeds will be allocated towards expanding lending activities, IT infrastructure upgrades, and enhancing distribution and product channels.
Access Holdings has demonstrated robust growth in key financial metrics, with a remarkable 87% year-on-year increase in gross earnings and a 334.76% surge in pre-tax profits in 2023. The bank’s strategic allocation of funds towards lending activities is expected to sustain its profitability momentum.
Shareholders considering participation in the rights issue should carefully evaluate their investment strategies, weighing the potential dilution of existing ownership stakes against the opportunity to acquire shares at a discount relative to historical average prices and future growth projections. Analysts have set a 12-month price target of N29 for Access Holdings, reflecting a potential 50% increase from current levels.
In conclusion, Access Holdings’ rights issue represents a strategic initiative aimed at fortifying its financial foundation, supporting growth objectives, and enhancing shareholder value. Shareholders face a pivotal decision in aligning their investment strategies with Access Holdings’ long-term growth trajectory and commitment to sustained profitability.
