By Babajide Komolafe
Interesting times with expectation of new strategic direction are ahead for FBN Holdings Plc, following the entrance of billionaire investor, Femi Otedola as a majority shareholder in the parent company of Nigeria’s oldest bank, First Bank of Nigeria Limited.
An indication to this occurred last week, when the board of FBN Holdings on Thursday dropped First Registrars and Investor Services Limited, as custodian for its shareholder records, replacing it with Meristem Registrars. This represents a major strategic shift given that First Registrar was formerly a subsidiary of First Bank and has acted as its registrar for a long time.
Analysts are projecting more of such bold and new strategic initiatives, in view of the emergence of Femi Otedola, widely regarded as a business turnaround expert, as a majority shareholder of FBN Holding Company.
Otedola’s new status in the company, was the culmination of a three weeks share purchase blitz, through his nominee, Calvados Global Services, which built up his shareholding in FBN Holding Company to 1,818,551,625 units of shares amounting to a 5.07 per cent of the company’s total issued capital.
This development was confirmed by the Board of FBN Holdings in a statement to the NGX signed by the Company Secretary Mr. Seye Kosoko.
The statement which was dated October 23, 2021, and titled, ‘Notification of Acquisition of Substantial Shareholdings in FBN Holdings Plc,’ the Kosoko stated: “We refer to our communication to the market dated October 22, 2021, on the above subject wherein we stated that we would inform the public of any substantial acquisition, upon receipt of notification from the Shareholder.
“This morning, October 23, 2021, FBN Holdings Plc received a notification from APT Securities and Funds Limited, that their Client, Mr. Otedola Olufemi Peter, and his nominee, Calvados Global Services Limited have acquired a total of 1,818,551,625 units of shares from the company’s issued share capital of 35,895,292,791. Based on the foregoing, the equity stake of Mr. Otedola Olufemi Peter and his nominee in the company is now 5.07 per cent.”
Faith in Nigeria’s Economy
Aside from his business acumen and knack for unlocking hidden value in struggling businesses, which have been well proven in Forte Oil Plc, now Ardova Plc and Geregu Power Plant, Otedola’s investment decisions are also driven by strong faith in the Nigerian economy.
This, according to Otedola, is also a major factor in his decision to invest massively in FBN Holdings Plc.
In his letter to the Chairman of the company, titled, ‘Interest in First Bank Holdings Plc,’ Otedola stated: “Pursuant to the notice of substantial shareholding tendered by my Stockbrokers, APT securities Limited and dated 22/10/2021, it is pertinent to state that we are in the process of consolidating shares held in the accounts of other indirect and nominee accounts and this will be forwarded in due course.
“In addition to the above, I also invested the sum of $30million in the bank’s long term debt instrument (classified as Tier II capital) which constitutes a significant portion of the bank’s capital base.
“I believe in the Nigerian economy, it is resilient and has a bright future. The current security challenges will be overcome. Anyone who fails to see the future now will lose out.”
In a comprehensive analysis of this development, analysts at Proshare opined that given his performance with Forte Oil and Geregu Power Plant, Otedola’s emergence as a majority shareholder has the potential to set the company in a new direction and enhance its market performance.
They said: “ Femi Otedola is not the easiest of individuals to understand or ignore. He has proven this over the years, and his business moves, while unconventional and sometimes erratic, are always intentional. He makes decisions that often prove inspired, especially those that affect his net worth and the texture and direction of industries he chooses to invest his cash. It would be a grievous error to bet against Otedola’s recent FBNH foray. The one-time oil maven has proven, over the years, that he has a yen for timing and a trained nose for the big moments.
“When he formally takes a seat on the board of FBNH, Otedola would be expected to bring his previous turnaround experience to bear on the operations of the Holdco. Although his most notable successes were in Oil Marketing, Otedola’s past business ventures cut across several other sectors from finance to investments and trading. The Holdco could do with a nudge in that would lift the quality of FBNH’s board decisions and project execution commitments.
“Otedola, along with other shareholders, must however do one of two things: push the Holdco to be more efficient and raise its economic value and market price, thereby improving return on equity (RoAE) or put pressure on the existing boards to improve sustainable performance or buy him out at a premium.
“Otedola’s determination and commitment to cause may prove effective in altering the bank’s dwindling market positioning. Indeed, with his recent FBNH equity acquisition, the financial services sector may see a redirected strategic shift of the Holdco as the wily investor takes on freshly minted blue ocean opportunities to protect his investment. ”
Sharing the same optimism about the expected positive impact of Otedola on the fortunes of FBN Holdings and First Bank, business analyst and former Managing Director of Assurance Bank Plc also opined described Otedola’s acquisition of a majority stake in FBN Holdings as a good development for the banking industry especially in terms of corporate governance and inspiration for future merger & acquisition.
Speaking on Arise TV, Mbonu said: “Do you recall in 2016, the CBN, knowing FBN is a systemically important bank intervened in the bank putting a new management and a new board and then gave some forbearances towards NPLs because the bank has suffered some years of poor corporate governance.
““What is happening now, we are enjoying it because the corporate landscape in Nigeria is really very boring. If you are abroad, you will see everyday mergers and acquisitions, management buy outs and whatever, while here it is just taciturn. It is just like a very quiet pond. What is happening in the First Bank is really interesting now.
When the CBN intervened, it appointed a new board for the Holding company and also for the bank, which is the major assets there. So what is happening now is that there were existing shareholders in the whole structure of the existing bank. Mr Femi Oyesola who we know very well as an aggressive investor, seeing the opportunity there, went and started buying up the shares.
“For the CBN, the regulators, they should be happy because this means things are happening in the bank, the bank is becoming more interesting. For the depositors of the bank, nobody should panic, things are okay in the bank. The shareholders are smiling because from a share of N7 or N3 at a time, it now moves to N12 going to N13 per share. So everybody is clapping and saying let the battle continue.
“I think the bank is a solid bank. It needs corporate governance and higher performance. And what does Femi Otedola bring to the board? That is the issue, what are the considerations? The CBN has to check if he is fit and proper to be a shareholder and if he wants to be a director.
“But we know some of his antecedents. He turned around African Petroleum to Forte Oil, and it became a prime company quoted on the stock exchange, with all the prizes they won, and then he sold it off. He took over Geregu Power Plant and then invested $100 million, which constitutes about 10 per cent of the power sector program in Nigeria now. And from personal experience he is a man of integrity. So this development will help First Bank to return as the King of the banking industry.”
Vanguard News Nigeria