Zenith Bank Plc has announced plans to raise N290 billion through a combination of a Rights Issue and a Public Offer, a move aimed at meeting the revised minimum capital requirements set by the Central Bank of Nigeria (CBN). This capital raise is poised to benefit both existing and new shareholders by offering them opportunities to invest in the bank at favorable terms.
The Rights Issue offers 5,232,748,964 ordinary shares at N36.00 per share, while the Public Offer provides 2,767,251,036 ordinary shares at N36.50 per share. Existing shareholders can purchase additional shares on a one-for-six basis, while the public offer is open to new investors. This hybrid approach is designed not only to meet the CBN’s capital requirements but also to provide additional working capital to support Zenith Bank’s expanding operations and investments in technology infrastructure.
Zenith Bank currently has an issued and fully paid share capital of N15.698 billion and a share premium of N255.047 billion. With the new capital raise, the bank aims to add N229.225 billion to its capital base, which will exceed the CBN’s requirement and further strengthen its financial position.
The pricing of the Rights Issue and Public Offer is competitive, with the Rights Issue priced at N36.00 per share—aligned with the current market price—and the Public Offer at N36.50 per share, slightly higher than the market price but below the year’s average price. The stock is currently trading at a price-to-earnings (P/E) ratio of 1.30x, which is lower than the banking sector average of 2.2x, suggesting that Zenith Bank may be undervalued compared to its peers. Its price-to-book (P/B) ratio of 0.4 and price-to-sales (P/S) ratio of 0.44 further indicate that the bank’s shares are trading at a discount.
Speaking on the hybrid offer, Dame (Dr.) Adaora Umeoji, Group Managing Director/CEO of Zenith Bank Plc, expressed optimism about the capital raise, highlighting the strong response from existing shareholders and the strategic importance of including a public offer to attract new investors. She emphasized that the proceeds would be used to expand the bank’s operations across Africa and internationally, invest in technology, and support ongoing working capital needs.
Zenith Bank has a strong track record of financial performance, consistently ranking as one of Africa’s leading financial institutions. In 2023, the bank reported a pre-tax profit of N795.962 billion, making it the most profitable listed bank on the Nigerian Exchange (NGX). The bank’s performance in the first quarter of 2024 suggests that it is on track to exceed its 2023 results, with gross earnings and profit before tax both showing significant year-on-year growth.
For investors, the hybrid offer presents an opportunity to acquire shares in a bank with a proven history of profitability and strong growth potential. The attractive valuation metrics and the bank’s leadership in dividend payouts make Zenith Bank a compelling investment option.
Zenith Bank’s hybrid offer reflects its commitment to maintaining its leadership position in Nigeria’s banking sector and ensuring long-term value creation for its shareholders.
