Demand for FBN shares rises amidst struggle for corporate control
The struggle for the corporate control of FBN Holdings Plc, the parent company of First Bank of Nigeria Limited, has raised the demand for the bank’s shares on the local bourse. Over the weekend, facts emerged that two groups led by billionaires may be locked in a fierce battle for the control of Nigeria’s oldest […]
The struggle for the corporate control of FBN Holdings Plc, the parent company of First Bank of Nigeria Limited, has raised the demand for the bank’s shares on the local bourse.
Over the weekend, facts emerged that two groups led by billionaires may be locked in a fierce battle for the control of Nigeria’s oldest bank.
One group is led by Femi Otedola, the erstwhile oil tycoon and core buyer of Geregu Power Plant during the privatisation of defunct NEPA, who had by the close of last week acquired a 5.07 percent of FBN Holding issued share capital, and another group, led by Mr. Tunde Hassan-Odukale, who is currently the Chairman of FBN Holdings and ultimate beneficial owner of Leadway Assurance Company Limited, who had cumulatively acquired 5 .36 percent of the FBN Holdings.
Given the expectation of a likely fierce struggle for supremacy, the shares of FBN Holding traded 350,541,622 units in 763 deals valued at N4,345,726,068.70 on Monday, the first trading day after the revelations over the weekend, representing 57% of the total N7.59billion value of transactions done on the NGX for the day.
It traded between N12.10 (its lowest price for the day) and N12.90 (the highest price for the day, which is also the highest price of the stock over the past 52-weeks) but finally closed at N12.55, translating to a 2.4% gain on its opening price of N12.25.
Market analysts told Daily Trust that the rising interest in the stock is a fallout of the struggle for corporate control, which is fuelling the speculative demand for the stock, as everyone expects that each stakeholder would seek to acquire more shares to achieve their objective of either gaining or sustaining control.
Mr. Yadinma Onwu, Executive Vice Chairman of Funds Matrix & Assets Management Limited, a broker-dealer firm on the NGX, noted that, “The rally reflects both increasing investor interest in the strong fundamentals of First Bank Holdings, especially as the bank’s asset quality and profitability continue to improve quarter-on-quarter.
“While the rally may wane soon, it is imperative to note that the recent rise in the share price may be justified from both speculative and fundamental perspectives,” he noted.
Supporting Onwu’ views, Chinenyem Anyanwu, the Managing Director/CEO of Dependable Securities, a dealer-member of NGX Exchange Group, said the surge in the demand for the shares represents the same momentum it gained in the past few weeks as a result of the recent acquisitions.
FBN Holdings reported N161.02 billion gross earnings and N38.09 billion profit after tax in its half-year results ending June 2021, its latest publicly available unaudited financial statements, as markets await the publication of its third-quarter earnings, hopefully within the week.
The price of N12.90, which is the highest price it traded today before easing to close at N12.55 also marks the highest price the stock ever traded in the past 52-weeks. This clearly may be a pointer to where the stock is headed, as it sees resistance below the N13.00 level.
With today’s rally, First Bank Holdings is now valued at a market capitalization of N450.49bn, which is still 42% discount to its book value of N772bn.