SEC Has Given Union Bank Approval To Raise N50bn Capital by way of Rights Issue

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The Management and Board of Directors of Union Bank of Nigeria Plc has received approval from the Securities and Exchange Commission (SEC) to go ahead with its Rights Issue of 12.1 billion ordinary shares of 50 kobo each at N4.10 per share to existing shareholders.

According to the bank, the rights issue will enable the bank to raise Tier 1 capital of about N50 billion.

Amehnews has some times ago reported that shareholders of the bank had already given their nod to the issue and with this regulators’ approval, the process of issue is set to open for subscription this month (September).

Emeka Emuwa, Chief Executive Officer of Union Bank, in commenting of SEC’s approval, he said: “The approval of the SEC brings us to the final stages of this important transaction for Union Bank which is critical to our short to medium term business objectives. The capital raised from the rights issue will support our strategy to accelerate business growth and position Union Bank as a leading commercial bank in Nigeria.”

The bank disclsoed that Chapel Hill Advisory Partners Limited is lead issuing house, while FSDH Merchant Bank Limited and Stanbic IBTC Capital Limited are joint issuing houses.

Some market operators are of the opinion that the fund would boost Union Bank’s performance and deliver good returns to shareholders going forward.

Already, the bank has recorded improved results for the half year(H1) ended June 30, 2017. Recorded a gross earnings of N73.7 billion from N60 billion in the corresponding period of 2016, representing a growth of 23 per cent. Interest income took advantages of naira devaluation-fueled foreign currency loan book to hit N58.3 billion, up from N44.3 billion. Customer deposits rose 15 per cent due to growing confidence in the bank to hit N759 billion as at June 30, up from N658 billion as December 31, 2016. Impairment charge fell by 39 per cent from N8.8 billion to N5.4 billion.

Profit before tax stood at N9.5 billion, showing a growth of seven per cent compared with N8.9 billion in 2016, while profit after tax rose by five per cent from N8.8 billion to N9.2 billion.

“As our centenary celebrations continue and with the launch of ourN50 billion rights issue in the second half of the year, 2017 will remain a very busy year for the bank. With our clear focus on enhancing the operational efficiency of the franchise. In a challenged economy, the group delivered PBT of N9.5 billion, a six growth over the corresponding period in 2016,” Emuwa had explained.

Celestine Ukpong, an asute investor may have different opinion as he said that the right issue news should have attracted investors and market operators to buy more of it shares or move share pricce. Ukpong calling the bank a middle class banking which mean the union bank not in top group or lower group of the lander

Bank with current market price of  N6.00 per share as at August 31, 2017 with outstanding shares of 16,935,806,471 and market capilisation of N101,614,838,826.00 may have be over price for the offer at N4.10 per share to existing shareholders. The right price for the offer should have between N3.50 low and N3.80 high, with N4.10 is like the management have gotten the core buyer already before issue will open without considers the retail investors in the country.


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