Amidst N239.4bn rights issue, UBA stocks record 375% returns

The United Bank for Africa (UBA) PLC has recorded 375 per cent capital gains in five years even as its N239.4bn rights issue is ongoing. Data from the Nigerian Exchange indicated that UBA remains an high-yielding and inflation-hedging stock in the market which has delivered close to 75 per cent of returns to investors annually. […]

The United Bank for Africa (UBA) PLC has recorded 375 per cent capital gains in five years even as its N239.4bn rights issue is ongoing.

Data from the Nigerian Exchange indicated that UBA remains an high-yielding and inflation-hedging stock in the market which has delivered close to 75 per cent of returns to investors annually.

According to the trading report for the period between December 31, 2019 and December 06, 2024, UBA recorded cumulative capital gain of 374.83 per cent during the period, representing average annual gain of 74.97 per cent.

The implication of this performance is that an investor who had put in N500, 000 in the shares of UBA at the year’s opening price for 2020, now has a real, immediate market value of more than N2.374 million, due to accumulated capital gains. This excludes accrued cash dividends over the five-year period.

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Daily Trust reports that UBA has delighted its investors with payment of dividends twice a year and recently paid an interim dividend of N2 per share on its first half 2024 results, the highest payout by any bank and one of the three highest yields in the entire stock market.

The bank recently kicked off its rights issue, offering existing shareholders exclusive opportunities to increase their shareholdings in the bank.

The banking group is offering 6.84 billion ordinary shares of 50 kobo each to existing shareholders at N35 per share.

The rights issue is pre-allotted on the basis of one new ordinary share of 50 kobo each to every five ordinary shares held as at November 05, 2024. The rights issue is scheduled to close on December 24, 2024.

UBA’s share price had opened 2020 at N7.15 per share, its closing price for December 31, 2019. It closed weekend at N33.95 per share, 35.26 per cent above its 2024’s opening price of N25.10 per share.

Shareholders said UBA’s track records of solid financial performance, dividend policy and capital gain were competitive advantages for the pan-African banking group.

Also, market analysts say the UBA performance is indicative of the value of the stock even as shareholders urged investors not to miss the opportunities of the ongoing rights issue.

Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe, said share pricing at the stock market thrives on a concept of “Forward-pricing mechanism”, where investors take into consideration the potential future return based on available track records and emerging developments.