Zenith Bank makes N8.7b public offer
By Gbenga Agbana
A ROBUST Initial Public Offering (IPO) of N8.72 billion was yesterday ratified for the country's fourth largest private financial institution, Zenith Bank Plc.
The offer opens on July 1 and ends on July 29. It has already been approved by the Securities and Exchange Commission (SEC) and the council of the Nigerian Stock Exchange (NSE).
The parties that are to market the offer met yesterday in Lagos and endorsed it. The IPO, which the bank's managing director Jim Ovia said is the country's largest ever, consists of 800 million ordinary shares of 50 kobo each at N10.90 per share.
In his address, Ovia said the board is delighted that new shareholders would be joining the bank and assured the intending investors of adequate returns on investment.
According to the prospectus of the offer, the purpose is to finance the bank's strategic business development and expansion of its network of branches to make quality banking more accessible to existing and potential clients.
It will also enable the bank to continuously upgrade its information technology installations to meet the demands of its expanding customer base and provide it with additional working capital.
Specifically, after deducting the estimated costs and expenses of N463million from the gross offer proceeds of N8.72 billion, the net proceeds of N8.257 billion would be utilised as follows: Strategic business development - expansion of branch network, N2.9billion or 35 per cent; while incremental working capital to support business expansion and take advantage of emerging opportunities gets the lion share of N3.3billion or 40 per cent; and the remaining 25 per cent or N2.1billion goes for information technology upgrade.
Packaged by Investment Banking & Trust Company Limited (IBTC), and FBN (Merchant Bankers) Limited, as joint issuing houses, the offer, according to market operators would be successful given the experience of the issuing houses in the packaging of issues in the past, and the bank's track records in the past.
The market capitalisation of the bank at the offer price pre-offer is N33.8billion, but it will rise to N42.5 billion after the offer.
Already, a preferred allotment of a maximum of 45.9 million shares representing 5.73 per cent of the offer, shall be allotted to workers of Zenith Bank, according to the prospectus.
Addressing journalists after the meeting, Ovia said the bank had a strong reputation and goodwill which would be sustained and improved upon when it eventually gets quoted on the Exchange.
Zenith Bank is currently the third most profitable bank in Nigeria and the fourth largest in terms of total assets and contingents.
It has consistently maintained a Tripple A rating by Agusto & Co since 1999.
The bank had total assets of N112.53 billion and shareholders funds of N12.88billion as at June 30, 2003, representing a 22 per cent and 35 per cent increase respectively over the previous year.
It recorded a profit before tax of N5.44 billion and a profit after tax of N4.42billion for the year ended June 30, 2003, representing 36 per cent and 22 per cent increase over the previous year.
