Yes, we
gathered that ETI had stated that it would sell part of its stake in Ecobank
Nigeria Plc by the end of the year to boost its working capital and meet up
with the Central Bank of Nigeria (CBN)’s directive on minimum capital
threshold.
ETI had planned to raise as much as $400
million with a sale of about 25 per cent of the Nigerian subsidiary but the
bank’s shares have fallen by 12 per cent since the end of June, amid
concern among investors that a slowdown in China, sub-Saharan Africa’s biggest
trading partner, and a looming rise in U.S. interest rates may weigh on
economic growth.
The Ecobank
Nigeria Plc boss stated that sliding market values implied that the bank would
not get good deal from the sale.
In his own
words: “The market is not right for us to be selling
part of that unit. We will not be doing any dilution at the moment. You cannot
sell an asset you don’t have to sell at the time when market prices are at the
bottom of the trough. We are adequately capitalized at the moment and if there
are business opportunities that require us to have more capital, we will
support that. We always have the option in future.”
According to
the bank’s biggest shareholder, Nedbank
Group Ltd., it was against being diluted by a sell down of the
Nigerian business, which is Ecobank’s largest. The South African bank spent
almost $500 million buying a 20 per cent stake less than a year ago.
In an chat
with newsmen, Mfundo Nkuhlu, who is
the Chief Operating Officer at Johannesburg-based Nedbank Group, said: “By raising tier 1 capital at subsidiary level, you’re
possibly diluting those who own Ecobank from the holding company level. Any
capital raise needs to be economically sensible to the holding company
shareholders.”
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