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Afribank shareholders approve N100bn Offer, Nov 1 kick-off


October 25, 2007/ Independent



Directors and professional advisers of Afribank Nigeria Plc at the mid-week in Lagos appended their signatures to documents that would enable the bank raise fresh N100 billion equity capital.


The bank hopes to raise the money between Wednesday November 1, and Monday December 10, by offering four billion ordinary shares of 50 kobo each by way of subscription to the public at N25.00 per share.


Aside from primarily helping the bank to compete favourably in the unfolding scenario in the nation’s financial services industry, Afribank hopes to invest the lion’s share of the N94.12 billion offers net profit, about N45.30 billion or 49 per cent in swelling its working capital. This is followed by N25.84 billion or 27 per cent in the expansion of branch network within the next 36 months. The plan involves the addition of 49 new branches across the country to its network within the period, out of which

Lagos is expected to host 30. Others are Jigawa, three; Kogi, five; among others.


According to the offer prospectus another N9.57 billion representing 10 per cent, is earmarked for information and communications technology infrastructure upgrade; while strategic business development such as ATM rollout, call centres, other electronic banking delivery channels will gulp N7.65 billion or 8.0 per cent.


The 38-year old bank also hopes to invest about N5.74 billion or 6.0 per cent of the offer proceeds in equity investment in subsidiaries like Afribank Capital; Afribank Registrars; Afribank Estate; and ANP,



As if as an icing in the offer cake, the directors have proposed that \"shareholders whose names appear in the register in the register of the bank, including subscribers to this offer, as at financial year ended March 31, 2008 will be eligible to participate in any dividend and/or bonus declared.\"


Speaking at a media session, immediately after the meeting, Mr. Sebastian Adigwe, managing director and chief executive of the bank explained that increasing working capital of the bank has become necessary, given the fact that with the current level of working capital, there are some big ticket transactions that the bank can not embark upon.


Adigwe assured that those who buy into the offer of capital appreciation, good dividend and bonus and future returns. He added that the price is reasonable considering the fact that it is at a discount of N5.49 or 18.0 per cent to current market value of N30.49 each.


Explaining further, the Afribank CEO said: \"the market price was N36.90 and because of the very impressive performance of the bank, the board approved that we pay one-for-five bonus and then 30 kobo cash dividend.


A combination of this two made the stock exchange to mark the price down to N30.49, which is what you have today. So if you look at it from this perspective from N36, N25 is a major discount for all those who want to invest in the bank’s shares.\"


Continuing, Adigwe stressed that the bank has hidden value and that what can be seen from the books of the bank is not the market value of the bank that has been built up over the past 48 years of its existence.


\"We have no doubt that at the end of the day, the offer would be over-subscribed,\" he noted.


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