By Niyi Jacobs
United Bank for Africa (UBA) Plc’s ongoing N239.4 billion Rights Issue is recently attracting scrutiny for its strategic pricing, which analysts suggest aims to consolidate control among key shareholders while addressing the bank’s N400 billion recapitalization target.
The Rights Issue offers 6.84 billion shares priced at N35.00 each, enabling existing shareholders to purchase one new share for every five held as of November 5, 2024.
Some investors in the Nigeria capital market have interpreted this pricing strategy as an effort to strengthen board-aligned holdings by encouraging major shareholders to acquire additional equity rights from minority stakeholders.
BusinessNG UBA’s ownership dynamics, which included a free float of 87.47% as of December 2023, are a significant factor in this strategy.
Analysts estimate that director-related entities holding shares below the 5% disclosure threshold may effectively reduce the float to 50-60%, positioning the Rights Issue to align with broader shareholder consolidation goals.
In addition to the N239 billion expected from the Rights Issue, UBA plans to raise the remaining N161 billion of its N400 billion target through a private placement, which is likely to be subscribed by major institutional investors.
“This isn’t about overvaluation; it’s a tactical approach to enhance special interest holdings,” noted an analyst.
The move aligns with UBA’s need to boost its capital base for expansion, regulatory compliance, and operational resilience in an increasingly competitive banking sector.
UBA’s Rights Issue coincides with a similar effort by FBN Holdings Plc, which is raising N149.56 billion through a Rights Issue of 5.98 billion shares at N25.00 per share, closing on December 12, 2024.
As Nigerian banks pursue aggressive capital-raising strategies, UBA’s approach highlights a broader trend of aligning recapitalization initiatives with shareholder restructuring, reflecting the sector’s evolving priorities in a dynamic economic landscape.
